AB 2029: Federally Qualified Health Clinics: rural health clinics.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2018-07-02
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, in accordance with Medicare reasonable cost principles, and to the extent that federal financial participation is obtained, to providers on a per-visit basis that is unique to each facility. Existing law prescribes the reimbursement rate methodology for establishing the per-visit rate. Under existing law, if an FQHC or RHC is partially reimbursed by a 3rd-party payer, such as a managed care entity, the department is required to reimburse the FQHC or RHC for the difference between its per-visit rate programs on a contract-by-contract basis, as specified. Existing law authorizes an FQHC or RHC to apply for an adjustment to its rate based on a change in the scope of services that it provides within 150 days following the beginning of the FQHCs or RHCs fiscal year. Existing law provides that the departments implementation of FQHC and RHC services is subject to federal approval and the availability of federal financial participation.
This bill would require the methodology of the adjusted per-visit rate to exclude exclude, among other things, a per-visit payment limitation and limitation, and provider productivity standard. The bill would authorize an FQHC or RHC to apply for a rate adjustment for the adoption, implementation, or upgrade of a certified electronic health record system as a change in the scope of services. The bill would modify how the department reimburses an FQHC or RHC that is partially reimbursed by a 3rd-party payer, as specified. The bill would expand the meaning of visit to include FQHC and RHC services rendered outside of the facility location, as specified. The bill would extend the time frame for an FQHC or RHC to file a scope of service rate change from 150 days following the beginning of the fiscal year to any time during the fiscal year, as specified. The bill would modify the reimbursement rate methodology to include a comparison of 3 comparable sites associated with the FQHC or RHC. The bill would require the department to ensure that department staff conducting audits related to FQHCs and RHCs receive appropriate training on federal and state laws governing these facilities, as specified. The bill would also make technical, nonsubstantive changes.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, in accordance with Medicare reasonable cost principles, and to the extent that federal financial participation is obtained, to providers on a per-visit basis that is unique to each facility. Existing law prescribes the reimbursement rate methodology for establishing the per-visit rate. Under existing law, if an FQHC or RHC is partially reimbursed by a 3rd-party payer, such as a managed care entity, the department is required to reimburse the FQHC or RHC for the difference between its per-visit rate programs on a contract-by-contract basis, as specified. Existing law authorizes an FQHC or RHC to apply for an adjustment to its rate based on a change in the scope of services that it provides within 90 150 days following the beginning of the FQHCs or RHCs fiscal year. Existing law provides that the departments implementation of FQHC and RHC services is subject to federal approval and the availability of federal financial participation.
This bill would require the methodology of the adjusted per-visit rate to exclude a per-visit payment limitation and provider productivity standard. The bill would authorize an FQHC or RHC to apply for a rate adjustment for the adoption, implementation, or upgrade of a certified electronic health record system as a change in the scope of services. The bill would modify how the department reimburses an FQHC or RHC that is partially reimbursed by a 3rd-party payer, as specified. The bill would extend the time frame for an FQHC or RHC to file a scope of service rate change from 90 150 days following the beginning of the fiscal year to any time during the fiscal year, as specified. The bill would modify the reimbursement rate methodology to include a comparison of 3 comparable sites associated with the FQHC or RHC. The bill would require the department to ensure that department staff conducting audits related to FQHCs and RHCs receive appropriate training on federal and state laws governing these facilities, as specified. The bill would also make technical, nonsubstantive changes.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, in accordance with Medicare reasonable cost principles, and to the extent that federal financial participation is obtained, to providers on a per-visit basis. basis that is unique to each facility. Existing law allows prescribes the reimbursement rate methodology for establishing the per-visit rate. 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 it provides. that it provides within 90 days following the beginning of the FQHCs or RHCs fiscal year. Existing law provides that the departments implementation of FQHC and RHC services is subject to federal approval and the availability of federal financial participation.
This bill would require the methodology of the adjusted per-visit rate to exclude a per-visit payment limitation and provider productivity standard. The bill would authorize an FQHC or RHC to apply for a rate adjustment for the adoption, implementation, or upgrade of a certified electronic health record system as a change in the scope of services. This The bill would extend the time frame for an FQHC or RHC to file a scope of service rate change from 90 days following the beginning of the fiscal year to any time during the fiscal year, as specified. The bill would modify the reimbursement rate methodology to include a comparison of 3 comparable sites associated with the FQHC or RHC. The bill would also make technical, nonsubstantive changes.
Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, in accordance with Medicare reasonable cost principles, and to the extent that federal financial participation is obtained, to providers on a per-visit basis. Existing law allows an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services it provides.
This bill would authorize an FQHC or RHC to apply for a rate adjustment for the adoption, implementation, or upgrade of a certified electronic health record system as a change in the scope of services. This bill would also make technical, nonsubstantive changes.
Existing federal and state law provide for a discounted drug pricing program (340B Drug Pricing Program) for certain federally funded grantees, some disproportionate share hospitals, and other covered entities, including FQHCs. State law requires a covered entity to dispense only 340B drugs to Medi-Cal beneficiaries.This bill would require an FQHC to participate in the 340B Drug Pricing Program, to the extent permitted by federal law. This bill would require the department to maintain the 340B discount program for purposes of maximizing FQHC funding opportunities.Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, in accordance with Medicare reasonable cost principles, and to the extent that federal financial participation is obtained, to providers on a per-visit basis. Existing law allows an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services it provides.
This bill would authorize an FQHC or RHC to apply for a rate adjustment for the adoption, implementation, or upgrade of a certified electronic health record system as a change in the scope of services. This bill would also make technical, nonsubstantive changes.
Existing federal and state law provide for a discounted drug pricing program (340B Drug Pricing Program) for certain federally funded grantees, some disproportionate share hospitals, and other covered entities, including FQHCs. State law requires a covered entity to dispense only 340B drugs to Medi-Cal beneficiaries.
This bill would require an FQHC to participate in the 340B Drug Pricing Program, to the extent permitted by federal law. This bill would require the department to maintain the 340B discount program for purposes of maximizing FQHC funding opportunities.
Existing law establishes an Office of Health Equity in the State Department of Public Health for purposes of aligning state resources, decisionmaking, and programs to accomplish certain goals related to health equity and protecting vulnerable communities. Existing law requires the office to develop departmentwide plans to close the gaps in health status and access to care among the states diverse racial and ethnic communities, women, persons with disabilities, and the lesbian, gay, bisexual, transgender, queer, and questioning communities, as specified. Existing law requires the office in developing and implementing the plans to consult with, and disseminate information to, those groups specified above. Existing law also requires the office to ensure that specified data is kept regarding ethic and racial health statistics for those groups.This bill would additionally require the plans to close the gaps in health status and access to care among immigrants and would require the office in developing and implementing the plans to consult with, and disseminate information to, immigrants, in addition to those other groups. The bill would also require the data collection to include ethnic and racial health statistics for immigrants.Existing law establishes an Office of Health Equity in the State Department of Public Health for purposes of aligning state resources, decisionmaking, and programs to accomplish certain goals related to health equity and protecting vulnerable communities. Existing law requires the office to develop departmentwide plans to close the gaps in health status and access to care among the states diverse racial and ethnic communities, women, persons with disabilities, and the lesbian, gay, bisexual, transgender, queer, and questioning communities, as specified. Existing law requires the office in developing and implementing the plans to consult with, and disseminate information to, those groups specified above. Existing law also requires the office to ensure that specified data is kept regarding ethic and racial health statistics for those groups.
This bill would additionally require the plans to close the gaps in health status and access to care among immigrants and would require the office in developing and implementing the plans to consult with, and disseminate information to, immigrants, in addition to those other groups. The bill would also require the data collection to include ethnic and racial health statistics for immigrants.
(a)The federally qualified health center (FQHC) services described in Section 1396(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic (RHC) services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)FQHC services and RHC 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, FQHC and 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 federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its any successor. To the extent there is a conflict between the federal reasonable cost principles, the terms of Part 75(commencing with Section 400) of Title 45 shall control. To the extent required under federal law, the adjusted per-visit rate shall include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration. The methodology of the adjusted per-visit rate shall exclude a per-visit payment limitation and limitation, provider productivity standard. standard, or any other method that applies cost limitations in the calculation of the per-visit rate that are not based on the reasonable cost of the FQHC or RHC as determined under applicable federal reasonable cost principles.
(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, or a change related to a Medi-Cal managed care plan contracting under this chapter or Chapter 8 (commencing with Section 14200) that either directly or indirectly impacts an FQHC or RHC.
(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, adults, 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, including the adoption, implementation, or upgrade of a certified electronic health record system, 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), Administration, including FQHC or RHC services rendered outside of the respective facility.
(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, including any increase in administrative costs, 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 federal reasonable cost reimbursement principles set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) 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 an FQHC and an RHC 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 and at any time 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 at any time during the 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 at any time during the following fiscal year that the FQHC or RHC discontinued providing the service. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an 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)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 (m). 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 both 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, 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. FQHC and RHC services rendered to a Medi-Cal beneficiary at a premise such as a temporary shelter, a beneficiarys residence, a location of another provider, or any location other than the location identified on the primary care clinic license or in the provider master file, shall be billed by the FQHC or RHC and reimbursed at the contracted rate when either of the following apply:
(A)The location where the services are provided is approved by the federal Health Resources and Services Administration as part of the FQHCs or RHCs application for its grant under Section 330 of the Public Health Service Act.
(B)The services are provided at a location requiring payment under Title XIX of the Social Security Act.
(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), if 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 chooses to bill these services as a separate visit, the FQHC or RHC 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 and bill these services as a separate visit, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(3)Notwithstanding any other provision of this section, no later than July 1, 2018, a visit shall include a marriage and family therapist.
(h)(1)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, and managed care financial incentive payments shall be excluded from the calculation. Financial incentive payments shall include, but are not limited to, monetary payments to the FQHCs or RHCs by a third-party payor for superior contract performance, such as improving health outcomes, reducing overall cost of care, or increasing the quality of care.
(2)In the case of services furnished by an FQHC or RHC pursuant to a contract between the FQHC or RHC and the managed care entity, the department shall reimburse the FQHC or RHC in accordance with paragraph (1) and Section 1396a(bb)(5) of Title 42 of the United States Code.
(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 sites with a similar caseload associated with the FQHC or RHC, or, if no sites exist, then three comparable FQHC or RHC sites 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.
(D)The department may adopt any further and additional methods of setting reimbursement rates for a newly qualified FQHC or RHC as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. An FQHC or RHC that has experienced changes in 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. An FQHC or RHC that has not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity met the definition of an FQHC or RHC as identified under Section 1396d(l) of Title 42 of the United States Code, 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 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)An FQHC or RHC may elect to have pharmacy services reimbursed on a fee-for-service basis as provided in subdivision (k).
(m)Reimbursement for Drug Medi-Cal services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC may elect to have Drug Medi-Cal services reimbursed directly from a county or the department under contract with the FQHC or RHC pursuant to paragraph (4).
(2)(A)For an FQHC or RHC to receive reimbursement for Drug Medi-Cal services directly from the county or the department under contract with the FQHC or RHC pursuant to paragraph (4), costs associated with providing Drug Medi-Cal services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing Drug Medi-Cal services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering Drug Medi-Cal services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver Drug Medi-Cal services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering Drug Medi-Cal services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing Drug Medi-Cal services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the Drug Medi-Cal services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering Drug Medi-Cal services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include Drug Medi-Cal services costs.
(B)An FQHC or RHC may submit requests for scope-of-service change under this subdivision at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that Drug Medi-Cal services were rendered and reimbursement for Drug Medi-Cal services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for Drug Medi-Cal services outside of the PPS rate when the FQHC or RHC obtains approval as a Drug Medi-Cal provider and enters into a contract with a county or the department to provide these services pursuant to paragraph (4).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For purposes of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and Drug Medi-Cal services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate and the FQHC or RHC is approved as a Drug Medi-Cal provider, an FQHC or RHC shall not bill the PPS rate for any Drug Medi-Cal services provided pursuant to a contract entered into with a county or the department pursuant to paragraph (4).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)Reimbursement for Drug Medi-Cal services shall be determined according to subparagraph (A) or (B), depending on whether the services are provided in a county that participates in the Drug Medi-Cal organized delivery system (DMC-ODS).
(A)In a county that participates in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county or county designee and the FQHC or RHC. If the county or county designee refuses to contract with the FQHC or RHC, the FQHC or RHC may follow the contract denial process set forth in the Special Terms and Conditions.
(B)In a county that does not participate in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county and the FQHC or RHC. If the county refuses to contract with the FQHC or RHC, the FQHC or RHC may request to contract directly with the department and shall be reimbursed for those services at the Drug Medi-Cal fee-for-service rate.
(5)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments for Drug Medi-Cal services made pursuant to this subdivision.
(6)For purposes of this subdivision, the following definitions shall apply:
(A)Drug Medi-Cal organized delivery system or DMC-ODS means the Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions.
(B)Special Terms and Conditions shall have the same meaning as set forth in subdivision (o) of Section 14184.10.
(n)Reimbursement for specialty mental health services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC and one or more mental health plans that contract with the department pursuant to Section 14712 may mutually elect to enter into a contract to have the FQHC or RHC provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plans network.
(2)(A)For an FQHC or RHC to receive reimbursement for specialty mental health services pursuant to a contract entered into with the mental health plan under paragraph (1), the costs associated with providing specialty mental health services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing specialty mental health services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering specialty mental health services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver specialty mental health services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering specialty mental health services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing specialty mental health services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the specialty mental health services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering specialty mental health services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include specialty mental health costs.
(B)An FQHC or RHC may submit requests for a scope-of-service change under this subdivision at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that specialty mental health services were rendered and reimbursement for specialty mental health services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for specialty mental health services outside of the PPS rate when the FQHC or RHC contracts with a mental health plan to provide these services pursuant to paragraph (1).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For the purpose of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and specialty mental health services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate, an FQHC or RHC shall not bill the PPS rate for any specialty mental health services that are provided pursuant to a contract entered into with a mental health plan pursuant to paragraph (1).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments made for specialty mental health services under this subdivision.
(o)An FQHC and RHC 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.
(p)The department shall 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.
(q)The department shall ensure that departmental staff conducting audits, pursuant to Article 5.3 of Chapter 7 of Division 9 of this code, of FQHCs and RHCs receive appropriate training on FQHC and RHC program policies and procedures within the Medi-Cal program, including the federal and state legislative history on statutory and regulatory provisions governing the program, and the grant parameters set forth under Section 330 of the federal Public Health Service Act. This training shall be incorporated into existing training opportunities available under the departments current budget for the purpose of improving the quality and integrity of the departments audit process related to the FQHC and RHC provider. Nothing in this subdivision shall be construed to increase departmental obligations.
(r)The department shall implement this section only to the extent that federal financial participation is available.
(s)Notwithstanding any other law, the director may, without taking regulatory action pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, implement, interpret, or make specific subdivisions (m) and (n) by means of a provider bulletin or similar instruction. The department shall notify and consult with interested parties and appropriate stakeholders in implementing, interpreting, or making specific the provisions of subdivisions (m) and (n), including all of the following:
(1)Notifying provider representatives in writing of the proposed action or change. The notice shall occur, and the applicable draft provider bulletin or similar instruction, shall be made available at least 10 business days prior to the meeting described in paragraph (2).
(2)Scheduling at least one meeting with interested parties and appropriate stakeholders to discuss the proposed action or change.
(3)Allowing for written input regarding the proposed action or change, to which the department shall provide summary written responses in conjunction with the issuance of the applicable final written provider bulletin or similar instruction.
(4)Providing at least 60 days advance notice of the effective date of the proposed action or change.
SEC. 2.Section 14132.101 of the Welfare and Institutions Code is repealed.(a)The federally qualified health center (FQHC) services described in Section 1396(a)(2)(C) of Title 42 of the United States Code are covered benefits.
(b)The rural health clinic (RHC) services described in Section 1396d(a)(2)(B) of Title 42 of the United States Code are covered benefits.
(c)FQHC services and RHC 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, FQHC and 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 federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor. To the extent required under federal law, the adjusted per-visit rate shall include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration. The methodology of the adjusted per-visit rate shall exclude a per-visit payment limitation and provider productivity standard.
(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, or a change related to a Medi-Cal managed care plan contracting under this chapter or Chapter 8 (commencing with Section 14200) that either directly or indirectly impacts an FQHC or RHC.
(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, adults, 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, including the adoption, implementation, or upgrade of a certified electronic health record system, 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), including FQHC or RHC services rendered outside of the respective facility.
(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, including any increase in administrative costs, 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 federal reasonable cost reimbursement principles set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) 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 an FQHC and an RHC 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 and at any time 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 at any time during the 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 at any time during the following fiscal year that the FQHC or RHC discontinued providing the service. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an 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)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 (m). 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 both 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, 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), if 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 chooses to bill these services as a separate visit, the FQHC or RHC 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 and bill these services as a separate visit, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(3)Notwithstanding any other provision of this section, no later than July 1, 2018, a visit shall include a marriage and family therapist.
(h)(1)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 for adjudicated claims on a contract-by-contract basis and not in the aggregate, programs, and managed care financial incentive payments shall be excluded from the calculation. Financial incentive payments shall include, but are not limited to, monetary payments to the FQHCs or RHCs by a third-party payor for superior contract performance, such as improving health outcomes, reducing overall cost of care, or increasing the quality of care.
(2)In the case of services furnished by an FQHC or RHC pursuant to a contract between the FQHC or RHC and the managed care entity, the department shall reimburse the FQHC or RHC in accordance with paragraph (1) and Section 1396a(bb)(5) of Title 42 of the United States Code.
(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 sites with a similar caseload associated with the FQHC or RHC, or, if no sites exist, then three comparable FQHC or RHC sites 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.
(D)The department may adopt any further and additional methods of setting reimbursement rates for a newly qualified FQHC or RHC as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. An FQHC or RHC that has experienced changes in 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. An FQHC or RHC that has not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity met the definition of an FQHC or RHC as identified under Section 1396d(l) of Title 42 of the United States Code, 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 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)An FQHC or RHC may elect to have pharmacy services reimbursed on a fee-for-service basis as provided in subdivision (k).
(m)Reimbursement for Drug Medi-Cal services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC may elect to have Drug Medi-Cal services reimbursed directly from a county or the department under contract with the FQHC or RHC pursuant to paragraph (4).
(2)(A)For an FQHC or RHC to receive reimbursement for Drug Medi-Cal services directly from the county or the department under contract with the FQHC or RHC pursuant to paragraph (4), costs associated with providing Drug Medi-Cal services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing Drug Medi-Cal services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering Drug Medi-Cal services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver Drug Medi-Cal services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering Drug Medi-Cal services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing Drug Medi-Cal services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the Drug Medi-Cal services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering Drug Medi-Cal services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include Drug Medi-Cal services costs.
(B)An FQHC or RHC may submit requests for scope-of-service change under this subdivision at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that Drug Medi-Cal services were rendered and reimbursement for Drug Medi-Cal services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for Drug Medi-Cal services outside of the PPS rate when the FQHC or RHC obtains approval as a Drug Medi-Cal provider and enters into a contract with a county or the department to provide these services pursuant to paragraph (4).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For purposes of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and Drug Medi-Cal services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate and the FQHC or RHC is approved as a Drug Medi-Cal provider, an FQHC or RHC shall not bill the PPS rate for any Drug Medi-Cal services provided pursuant to a contract entered into with a county or the department pursuant to paragraph (4).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)Reimbursement for Drug Medi-Cal services shall be determined according to subparagraph (A) or (B), depending on whether the services are provided in a county that participates in the Drug Medi-Cal organized delivery system (DMC-ODS).
(A)In a county that participates in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county or county designee and the FQHC or RHC. If the county or county designee refuses to contract with the FQHC or RHC, the FQHC or RHC may follow the contract denial process set forth in the Special Terms and Conditions.
(B)In a county that does not participate in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county and the FQHC or RHC. If the county refuses to contract with the FQHC or RHC, the FQHC or RHC may request to contract directly with the department and shall be reimbursed for those services at the Drug Medi-Cal fee-for-service rate.
(5)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments for Drug Medi-Cal services made pursuant to this subdivision.
(6)For purposes of this subdivision, the following definitions shall apply:
(A)Drug Medi-Cal organized delivery system or DMC-ODS means the Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions.
(B)Special Terms and Conditions shall have the same meaning as set forth in subdivision (o) of Section 14184.10.
(n)Reimbursement for specialty mental health services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC and one or more mental health plans that contract with the department pursuant to Section 14712 may mutually elect to enter into a contract to have the FQHC or RHC provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plans network.
(2)(A)For an FQHC or RHC to receive reimbursement for specialty mental health services pursuant to a contract entered into with the mental health plan under paragraph (1), the costs associated with providing specialty mental health services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing specialty mental health services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering specialty mental health services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver specialty mental health services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering specialty mental health services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing specialty mental health services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the specialty mental health services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering specialty mental health services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include specialty mental health costs.
(B)An FQHC or RHC may submit requests for a scope-of-service change under this subdivision at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that specialty mental health services were rendered and reimbursement for specialty mental health services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for specialty mental health services outside of the PPS rate when the FQHC or RHC contracts with a mental health plan to provide these services pursuant to paragraph (1).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For the purpose of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and specialty mental health services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate, an FQHC or RHC shall not bill the PPS rate for any specialty mental health services that are provided pursuant to a contract entered into with a mental health plan pursuant to paragraph (1).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments made for specialty mental health services under this subdivision.
(o)An FQHC and RHC 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.
(p)The department shall 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.
(q)The department shall ensure that departmental staff conducting audits, pursuant to Article 5.3 of Chapter 7 of Division 9 of this code, of FQHCs and RHCs receive appropriate training on FQHC and RHC program policies and procedures within the Medi-Cal program, including the federal and state legislative history on statutory and regulatory provisions governing the program, and the grant parameters set forth under Section 330 of the federal Public Health Service Act. This training shall be incorporated into existing training opportunities available under the departments current budget for the purpose of improving the quality and integrity of the departments audit process related to the FQHC and RHC provider. Nothing in this subdivision shall be construed to increase departmental obligations.
(q)(r)The department shall implement this section only to the extent that federal financial participation is available.
(r)(s)Notwithstanding any other law, the director may, without taking regulatory action pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, implement, interpret, or make specific subdivisions (m) and (n) by means of a provider bulletin or similar instruction. The department shall notify and consult with interested parties and appropriate stakeholders in implementing, interpreting, or making specific the provisions of subdivisions (m) and (n), including all of the following:
(1)Notifying provider representatives in writing of the proposed action or change. The notice shall occur, and the applicable draft provider bulletin or similar instruction, shall be made available at least 10 business days prior to the meeting described in paragraph (2).
(2)Scheduling at least one meeting with interested parties and appropriate stakeholders to discuss the proposed action or change.
(3)Allowing for written input regarding the proposed action or change, to which the department shall provide summary written responses in conjunction with the issuance of the applicable final written provider bulletin or similar instruction.
(4)Providing at least 60 days advance notice of the effective date of the proposed action or change.
SEC. 2.Section 14132.101 of the Welfare and Institutions Code is repealed.14132.101.(a)Notwithstanding paragraphs (4) and (5) of subdivision (e) of Section 14132.100, a scope-of-service change request, whether mandatory or permissive, shall be timely when filed within 150 days following the beginning of the federally qualified health centers or rural health clinics fiscal year following the year in which the change occurred.(b)Notwithstanding subdivision (a), and notwithstanding subdivision (e) of Section 14132.100, a federally qualified health center described in Section 14132.102 shall be deemed to have filed a scope-of-service change in a timely manner upon compliance with the requirements set forth in subdivision (c) of Section 14132.102.(a)The federally qualified health center (FQHC) services described in Section 1396(a)(2)(C), and provided by an FQHC as defined in Section 1396d(l), 1396(a)(2)(C) of Title 42 of the United States Code, Code are covered benefits.
(b)The rural health clinic (RHC) services described in Section 1396d(a)(2)(B), and provided by an RHC as defined in Section 1396d(l), 1396d(a)(2)(B) of Title 42 of the United States Code, Code are covered benefits.
(c)FQHC services and RHC 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, FQHC and 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 federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor. To the extent required under federal law, the adjusted per-visit rate shall include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration. The methodology of the adjusted per-visit rate shall exclude a per- visit payment limitation and provider productivity standard.
(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. rules, or a change related to a Medi-Cal managed care plan contracting under this chapter or Chapter 8 (commencing with Section 14200) that either directly or indirectly impacts an FQHC or RHC.
(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, adults, 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, including the adoption, implementation, or upgrade of a certified electronic health record system, 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). (HRSA), including FQHC or RHC services rendered outside of the respective facility.
(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 cost, including any increase in administrative costs, 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 federal reasonable cost reimbursement principles set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413) 413.1) 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 an FQHC and an RHC 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 year and at any time 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 the beginning of any at any time during the 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 the beginning of the at any time during the following fiscal year. year that the FQHC or RHC discontinued providing the service. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an 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)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 (m). 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 both 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, 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), if 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 chooses to bill these services as a separate visit, the FQHC or RHC 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 and bill these services as a separate visit, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(3)Notwithstanding any other provision of this section, no later than July 1, 2018, a visit shall include a marriage and family therapist.
(h)(1)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 for adjudicated claims 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 shall be excluded from the calculation. Financial incentive payments shall include, but are not limited to, monetary payments to the FQHCs or RHCs by a third-party payor for superior contract performance, such as improving health outcomes, reducing overall cost of care, or increasing the quality of care.
(2)In the case of services furnished by an FQHC or RHC pursuant to a contract between the FQHC or RHC and the managed care entity, the department shall reimburse the FQHC or RHC in accordance with paragraph (1) and Section 1396a(bb)(5) of Title 42 of the United States Code.
(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 sites with a similar caseload associated with the FQHC or RHC, or, if no sites exist, then three comparable FQHC or RHC sites 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.
(D)The department may adopt any further and additional methods of setting reimbursement rates for a newly qualified FQHC or RHC as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. An FQHC or RHC that has experienced changes in 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. An FQHC or RHC that has not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity met the meaning given to definition of an FQHC and or RHC as identified under Section 1396d(l) of Title 42 of the United States Code, 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 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)An FQHC or RHC may elect to have pharmacy services reimbursed on a fee-for-service basis as provided in subdivision (k).
(m)Reimbursement for Drug Medi-Cal services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC may elect to have Drug Medi-Cal services reimbursed directly from a county or the department under contract with the FQHC or RHC pursuant to paragraph (4).
(2)(A)For an FQHC or RHC to receive reimbursement for Drug Medi-Cal services directly from the county or the department under contract with the FQHC or RHC pursuant to paragraph (4), costs associated with providing Drug Medi-Cal services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing Drug Medi-Cal services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering Drug Medi-Cal services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver Drug Medi-Cal services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering Drug Medi-Cal services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing Drug Medi-Cal services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the Drug Medi-Cal services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering Drug Medi-Cal services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include Drug Medi-Cal services costs.
(B)An FQHC or RHC may submit requests for scope-of-service change under this subdivision only within 90 days following the beginning of at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that Drug Medi-Cal services were rendered and reimbursement for Drug Medi-Cal services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for Drug Medi-Cal services outside of the PPS rate when the FQHC or RHC obtains approval as a Drug Medi-Cal provider and enters into a contract with a county or the department to provide these services pursuant to paragraph (4).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For purposes of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and Drug Medi-Cal services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate and the FQHC or RHC is approved as a Drug Medi-Cal provider, an FQHC or RHC shall not bill the PPS rate for any Drug Medi-Cal services provided pursuant to a contract entered into with a county or the department pursuant to paragraph (4).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)Reimbursement for Drug Medi-Cal services shall be determined according to subparagraph (A) or (B), depending on whether the services are provided in a county that participates in the Drug Medi-Cal organized delivery system (DMC-ODS).
(A)In a county that participates in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county or county designee and the FQHC or RHC. If the county or county designee refuses to contract with the FQHC or RHC, the FQHC or RHC may follow the contract denial process set forth in the Special Terms and Conditions.
(B)In a county that does not participate in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county and the FQHC or RHC. If the county refuses to contract with the FQHC or RHC, the FQHC or RHC may request to contract directly with the department and shall be reimbursed for those services at the Drug Medi-Cal fee-for-service rate.
(5)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments for Drug Medi-Cal services made pursuant to this subdivision.
(6)For purposes of this subdivision, the following definitions shall apply:
(A)Drug Medi-Cal organized delivery system or DMC-ODS means the Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions.
(B)Special Terms and Conditions shall have the same meaning as set forth in subdivision (o) of Section 14184.10.
(n)Reimbursement for specialty mental health services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC and one or more mental health plans that contract with the department pursuant to Section 14712 may mutually elect to enter into a contract to have the FQHC or RHC provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plans network.
(2)(A)For an FQHC or RHC to receive reimbursement for specialty mental health services pursuant to a contract entered into with the mental health plan under paragraph (1), the costs associated with providing specialty mental health services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing specialty mental health services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering specialty mental health services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver specialty mental health services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering specialty mental health services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing specialty mental health services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the specialty mental health services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering specialty mental health services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include specialty mental health costs.
(B)An FQHC or RHC may submit requests for a scope-of-service change under this subdivision only within 90 days following the beginning of at any time during the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that specialty mental health services were rendered and reimbursement for specialty mental health services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for specialty mental health services outside of the PPS rate when the FQHC or RHC contracts with a mental health plan to provide these services pursuant to paragraph (1).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For the purpose of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and specialty mental health services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate, an FQHC or RHC shall not bill the PPS rate for any specialty mental health services that are provided pursuant to a contract entered into with a mental health plan pursuant to paragraph (1).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments made for specialty mental health services under this subdivision.
(o)An FQHC and RHC 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.
(p)The department shall 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.
(q)The department shall implement this section only to the extent that federal financial participation is available.
(r)Notwithstanding any other law, the director may, without taking regulatory action pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, implement, interpret, or make specific subdivisions (l) and (m) and (n) by means of a provider bulletin or similar instruction. The department shall notify and consult with interested parties and appropriate stakeholders in implementing, interpreting, or making specific the provisions of subdivisions (l) (m) and (m), (n), including all of the following:
(1)Notifying provider representatives in writing of the proposed action or change. The notice shall occur, and the applicable draft provider bulletin or similar instruction, shall be made available at least 10 business days prior to the meeting described in paragraph (2).
(2)Scheduling at least one meeting with interested parties and appropriate stakeholders to discuss the proposed action or change.
(3)Allowing for written input regarding the proposed action or change, to which the department shall provide summary written responses in conjunction with the issuance of the applicable final written provider bulletin or similar instruction.
(4)Providing at least 60 days advance notice of the effective date of the proposed action or change.
(a)The federally qualified health center (FQHC) services described in Section 1396(a)(2)(C), and provided by an FQHC as defined in Section 1396d(l), of Title 42 of the United States Code, are covered benefits.
(b)The rural health clinic (RHC) services described in Section 1396d(a)(2)(B), and provided by an RHC as defined in Section 1396d(l), of Title 42 of the United States Code, are covered benefits.
(c)FQHC services and RHC 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, FQHC and 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 reimbursement 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, including the adoption, implementation, or upgrade of a certified electronic health record system, 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 reimbursement 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 an FQHC and an RHC 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 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 the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an 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)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). (m). 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 both 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, 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), if 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 chooses to bill these services as a separate visit, the FQHC or RHC 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 and bill these services as a separate visit, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(3)Notwithstanding any other provision of this section, no later than July 1, 2018, a visit shall include a marriage and family therapist.
(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.
(D)The department may adopt any further and additional methods of setting reimbursement rates for a newly qualified FQHC or RHC as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. An FQHC or RHC that has experienced changes in 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. An FQHC or RHC that has not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity met the meaning given to an FQHC and RHC as identified under Section 1396d(l) of Title 42 of the United States Code, 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 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)(1)An FQHC or RHC may elect to have pharmacy services reimbursed on a fee-for-service basis as provided in subdivision (k).
(2)The department shall require an FQHC, as a covered entity within the meaning of Section 256b of Title 42 of the United States Code and subdivision (a) of Section 14105.46, to participate in the 340B discount drug purchasing program, as described in Section 256b of Title 42 of the United States Code and subdivisions (a) to (f), inclusive, of Section 14105.46, to the extent permitted by federal law.(3)The department shall maintain the 340B discount program for purposes of maximizing FQHC funding opportunities.(m)Reimbursement for Drug Medi-Cal services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC may elect to have Drug Medi-Cal services reimbursed directly from a county or the department under contract with the FQHC or RHC pursuant to paragraph (4).
(2)(A)For an FQHC or RHC to receive reimbursement for Drug Medi-Cal services directly from the county or the department under contract with the FQHC or RHC pursuant to paragraph (4), costs associated with providing Drug Medi-Cal services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing Drug Medi-Cal services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering Drug Medi-Cal services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver Drug Medi-Cal services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering Drug Medi-Cal services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing Drug Medi-Cal services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the Drug Medi-Cal services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering Drug Medi-Cal services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include Drug Medi-Cal services costs.
(B)An FQHC or RHC may submit requests for scope-of-service change under this subdivision only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that Drug Medi-Cal services were rendered and reimbursement for Drug Medi-Cal services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for Drug Medi-Cal services outside of the PPS rate when the FQHC or RHC obtains approval as a Drug Medi-Cal provider and enters into a contract with a county or the department to provide these services pursuant to paragraph (4).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare reasonable cost reimbursement principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For purposes of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and Drug Medi-Cal services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate and the FQHC or RHC is approved as a Drug Medi-Cal provider, an FQHC or RHC shall not bill the PPS rate for any Drug Medi-Cal services provided pursuant to a contract entered into with a county or the department pursuant to paragraph (4).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)Reimbursement for Drug Medi-Cal services shall be determined according to subparagraph (A) or (B), depending on whether the services are provided in a county that participates in the Drug Medi-Cal organized delivery system (DMC-ODS).
(A)In a county that participates in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county or county designee and the FQHC or RHC. If the county or county designee refuses to contract with the FQHC or RHC, the FQHC or RHC may follow the contract denial process set forth in the Special Terms and Conditions.
(B)In a county that does not participate in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county and the FQHC or RHC. If the county refuses to contract with the FQHC or RHC, the FQHC or RHC may request to contract directly with the department and shall be reimbursed for those services at the Drug Medi-Cal fee-for-service rate.
(5)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments for Drug Medi-Cal services made pursuant to this subdivision.
(6)For purposes of this subdivision, the following definitions shall apply:
(A)Drug Medi-Cal organized delivery system or DMC-ODS means the Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions.
(B)Special Terms and Conditions shall have the same meaning as set forth in subdivision (o) of Section 14184.10.
(n)Reimbursement for specialty mental health services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC and one or more mental health plans that contract with the department pursuant to Section 14712 may mutually elect to enter into a contract to have the FQHC or RHC provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plans network.
(2)(A)For an FQHC or RHC to receive reimbursement for specialty mental health services pursuant to a contract entered into with the mental health plan under paragraph (1), the costs associated with providing specialty mental health services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing specialty mental health services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering specialty mental health services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver specialty mental health services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering specialty mental health services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing specialty mental health services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the specialty mental health services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering specialty mental health services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include specialty mental health costs.
(B)An FQHC or RHC may submit requests for a scope-of-service change under this subdivision only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that specialty mental health services were rendered and reimbursement for specialty mental health services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for specialty mental health services outside of the PPS rate when the FQHC or RHC contracts with a mental health plan to provide these services pursuant to paragraph (1).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare reasonable cost reimbursement principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For the purpose of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and specialty mental health services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate, an FQHC or RHC shall not bill the PPS rate for any specialty mental health services that are provided pursuant to a contract entered into with a mental health plan pursuant to paragraph (1).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments made for specialty mental health services under this subdivision.
(o)An FQHC and RHC 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.
(p)The department shall 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.
(q)The department shall implement this section only to the extent that federal financial participation is available.
(r)Notwithstanding any other law, the director may, without taking regulatory action pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, implement, interpret, or make specific subdivisions (l) and (m) by means of a provider bulletin or similar instruction. The department shall notify and consult with interested parties and appropriate stakeholders in implementing, interpreting, or making specific the provisions of subdivisions (l) and (m), including all of the following:
(1)Notifying provider representatives in writing of the proposed action or change. The notice shall occur, and the applicable draft provider bulletin or similar instruction, shall be made available at least 10 business days prior to the meeting described in paragraph (2).
(2)Scheduling at least one meeting with interested parties and appropriate stakeholders to discuss the proposed action or change.
(3)Allowing for written input regarding the proposed action or change, to which the department shall provide summary written responses in conjunction with the issuance of the applicable final written provider bulletin or similar instruction.
(4)Providing at least 60 days advance notice of the effective date of the proposed action or change.
(a)The federally qualified health center (FQHC) services described in Section 1396d(a)(2) (C) 1396(a)(2)(C), and provided by an FQHC as defined in Section 1396d(l), of Title 42 of the United States Code Code, are covered benefits.
(b)The rural health clinic (RHC) services described in Section 1396d(a)(2)(B) 1396d(a)(2)(B), and provided by an RHC as defined in Section 1396d(l), of Title 42 of the United States Code Code, are covered benefits.
(c)Federally qualified health center FQHC services and rural health clinic RHC 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) FQHC and 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 reimbursement 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 practices, including the adoption, implementation, or upgrade of a certified electronic health record system, 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 reimbursement 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 an FQHC and RHCs an RHC 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 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 the beginning of the following fiscal year. The rate change shall be effective as provided for in paragraph (4). As used in this paragraph, significantly lower means an average per-visit rate decrease in excess of 2.5 percent.
(6)Notwithstanding paragraph (4), if the approved scope-of-service change or changes were initially implemented on or after the first day of an 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)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 both 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, 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), if 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 chooses to bill these services as a separate visit, the FQHC or RHC 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 and bill these services as a separate visit, shall process the addition of these services as a change in scope of service pursuant to subdivision (e).
(3)Notwithstanding any other provision of this section, no later than July 1, 2018, a visit shall include a marriage and family therapist.
(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.
(D)The department may adopt any further and additional methods of setting reimbursement rates for a newly qualified FQHCs FQHC or RHCs RHC as are consistent with Section 1396a(bb)(4) of Title 42 of the United States Code.
(2)In order for an FQHC or RHC to establish the comparability of its caseload for purposes of subparagraph (A) or (B) of paragraph (1), the department shall require that the FQHC or RHC submit its most recent annual utilization report as submitted to the Office of Statewide Health Planning and Development, unless the FQHC or RHC was not required to file an annual utilization report. FQHCs or RHCs An FQHC or RHC that have has 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 An FQHC or RHCs RHC that have has not previously submitted an annual utilization report shall submit to the department a completed report in the format applicable to the prior calendar year. The FQHC or RHC shall not be required to submit the annual utilization report for the comparable FQHCs or RHCs to the department, but shall be required to identify the comparable FQHCs or RHCs.
(3)The rate for any newly qualified entity set forth under this subdivision shall be effective retroactively to the later of the date that the entity was first qualified by the applicable federal agency as an FQHC or RHC, met the meaning given to an FQHC and RHC as identified under Section 1396d(l) of Title 42 of the United States Code, 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)(1)An FQHC or RHC may elect to have pharmacy services reimbursed on a fee-for-service basis as provided in subdivision (k).
(2)The department shall require an FQHC, as a covered entity within the meaning of Section 256b of Title 42 of the United States Code and subdivision (a) of Section 14105.46, to participate in the 340B discount drug purchasing program, as described in Section 256b of Title 42 of the United States Code and subdivisions (a) to (f), inclusive, of Section 14105.46, to the extent permitted by federal law.
(3)The department shall maintain the 340B discount program for purposes of maximizing FQHC funding opportunities.
(l)(m)Reimbursement for Drug Medi-Cal services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC may elect to have Drug Medi-Cal services reimbursed directly from a county or the department under contract with the FQHC or RHC pursuant to paragraph (4).
(2)(A)For an FQHC or RHC to receive reimbursement for Drug Medi-Cal services directly from the county or the department under contract with the FQHC or RHC pursuant to paragraph (4), costs associated with providing Drug Medi-Cal services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing Drug Medi-Cal services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering Drug Medi-Cal services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver Drug Medi-Cal services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering Drug Medi-Cal services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing Drug Medi-Cal services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the Drug Medi-Cal services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering Drug Medi-Cal services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include Drug Medi-Cal services costs.
(B)An FQHC or RHC may submit requests for scope-of-service change under this subdivision only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that Drug Medi-Cal services were rendered and reimbursement for Drug Medi-Cal services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for Drug Medi-Cal services outside of the PPS rate when the FQHC or RHC obtains approval as a Drug Medi-Cal provider and enters into a contract with a county or the department to provide these services pursuant to paragraph (4).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare reasonable cost reimbursement principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For purposes of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and Drug Medi-Cal services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate and the FQHC or RHC is approved as a Drug Medi-Cal provider, an FQHC or RHC shall not bill the PPS rate for any Drug Medi-Cal services provided pursuant to a contract entered into with a county or the department pursuant to paragraph (4).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)Reimbursement for Drug Medi-Cal services shall be determined according to subparagraph (A) or (B), depending on whether the services are provided in a county that participates in the Drug Medi-Cal organized delivery system (DMC-ODS).
(A)In a county that participates in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county or county designee and the FQHC or RHC. If the county or county designee refuses to contract with the FQHC or RHC, the FQHC or RHC may follow the contract denial process set forth in the Special Terms and Conditions.
(B)In a county that does not participate in the DMC-ODS, the FQHC or RHC shall receive reimbursement pursuant to a mutually agreed upon contract entered into between the county and the FQHC or RHC. If the county refuses to contract with the FQHC or RHC, the FQHC or RHC may request to contract directly with the department and shall be reimbursed for those services at the Drug Medi-Cal fee-for-service rate.
(5)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments for Drug Medi-Cal services made pursuant to this subdivision.
(6)For purposes of this subdivision, the following definitions shall apply:
(A)Drug Medi-Cal organized delivery system or DMC-ODS means the Drug Medi-Cal organized delivery system authorized under the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services and described in the Special Terms and Conditions.
(B)Special Terms and Conditions shall have the same meaning as set forth in subdivision (o) of Section 14184.10.
(m)(n)Reimbursement for specialty mental health services shall be provided pursuant to this subdivision.
(1)An FQHC or RHC and one or more mental health plans that contract with the department pursuant to Section 14712 may mutually elect to enter into a contract to have the FQHC or RHC provide specialty mental health services to Medi-Cal beneficiaries as part of the mental health plans network.
(2)(A)For an FQHC or RHC to receive reimbursement for specialty mental health services pursuant to a contract entered into with the mental health plan under paragraph (1), the costs associated with providing specialty mental health services shall not be included in the FQHCs or RHCs per-visit PPS rate. For purposes of this subdivision, the costs associated with providing specialty mental health services shall not be considered to be within the FQHCs or RHCs clinic base PPS rate if in delivering specialty mental health services the clinic uses different clinical staff at a different location.
(B)If the FQHC or RHC does not use different clinical staff at a different location to deliver specialty mental health services, the FQHC or RHC shall submit documentation, in a manner determined by the department, that the current per-visit PPS rate does not include any costs related to rendering specialty mental health services, including costs related to utilizing space in part of the FQHCs or RHCs building, that are or were previously calculated as part of the clinics base PPS rate.
(3)If the costs associated with providing specialty mental health services are within the FQHCs or RHCs clinic base PPS rate, as determined by the department, the specialty mental health services costs shall be adjusted out of the FQHCs or RHCs per-visit PPS rate as a change in scope of service.
(A)An FQHC or RHC shall submit to the department a scope-of-service change request to adjust the FQHCs or RHCs clinic base PPS rate after the first full fiscal year of rendering specialty mental health services outside of the PPS rate. Notwithstanding subdivision (e), the scope-of-service change request shall include a full fiscal year of activity that does not include specialty mental health costs.
(B)An FQHC or RHC may submit requests for a scope-of-service change under this subdivision only within 90 days following the beginning of the FQHCs or RHCs fiscal year. Any scope-of-service change request under this subdivision approved by the department shall be retroactive to the first day that specialty mental health services were rendered and reimbursement for specialty mental health services was received outside of the PPS rate, but in no case shall the effective date be earlier than January 1, 2018.
(C)The FQHC or RHC may bill for specialty mental health services outside of the PPS rate when the FQHC or RHC contracts with a mental health plan to provide these services pursuant to paragraph (1).
(D)Within 90 days of receipt of the request for a scope-in-service change under this subdivision, the department shall issue the FQHC or RHC an interim rate equal to 90 percent of the FQHCs or RHCs projected allowable cost, as determined by the department. An audit to determine the final rate shall be performed in accordance with Section 14170.
(E)Rate changes based on a request for scope-of-service change under this subdivision shall be evaluated in accordance with Medicare reasonable cost reimbursement principles, as set forth in Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or its successor.
(F)For the purpose of recalculating the PPS rate, the FQHC or RHC shall provide upon request to the department verifiable documentation as to which employees spent time, and the actual time spent, providing federally qualified health center services or rural health center services and specialty mental health services.
(G)After the department approves the adjustment to the FQHCs or RHCs clinic base PPS rate, an FQHC or RHC shall not bill the PPS rate for any specialty mental health services that are provided pursuant to a contract entered into with a mental health plan pursuant to paragraph (1).
(H)An FQHC or RHC that reverses its election under this subdivision shall revert to its prior PPS 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 the applicable scope-of-service adjustments as provided for in subdivision (e).
(4)The department shall not reimburse an FQHC or RHC pursuant to subdivision (h) for the difference between its per-visit PPS rate and any payments made for specialty mental health services under this subdivision.
(n)FQHCs and RHCs(o)An FQHC and RHC 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.
(o)(p)The department shall 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.
(p)(q)The department shall implement this section only to the extent that federal financial participation is available.
(q)(r)Notwithstanding any other law, the director may, without taking regulatory action pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, implement, interpret, or make specific subdivisions (l) and (m) by means of a provider bulletin or similar instruction. The department shall notify and consult with interested parties and appropriate stakeholders in implementing, interpreting, or making specific the provisions of subdivisions (l) and (m), including all of the following:
(1)Notifying provider representatives in writing of the proposed action or change. The notice shall occur, and the applicable draft provider bulletin or similar instruction, shall be made available at least 10 business days prior to the meeting described in paragraph (2).
(2)Scheduling at least one meeting with interested parties and appropriate stakeholders to discuss the proposed action or change.
(3)Allowing for written input regarding the proposed action or change, to which the department shall provide summary written responses in conjunction with the issuance of the applicable final written provider bulletin or similar instruction.
(4)Providing at least 60 days advance notice of the effective date of the proposed action or change.
SECTION 1.Section 152 of the Health and Safety Code is amended to read:152.(a)The Office of Health Equity within the State Department of Public Health shall do all of the following:(1)Perform strategic planning to develop departmentwide plans for implementation of goals and objectives to close the gaps in health status and access to care among the states diverse racial and ethnic communities, women, persons with disabilities, immigrants, and the lesbian, gay, bisexual, transgender, queer, and questioning (LGBTQQ) communities.(2)Conduct departmental policy analysis on specific issues related to multicultural health.(3)Coordinate projects funded by the state that are related to improving the effectiveness of services to ethnic and racial communities, women, immigrants, and the LGBTQQ communities.(4)Identify the unnecessary duplication of services and future service needs.(5)Communicate and disseminate information and perform a liaison function within the department and to providers of health, social, educational, and support services to racial and ethnic communities, women, persons with disabilities, immigrants, and the LGBTQQ communities. The department shall consult regularly with representatives from diverse racial and ethnic communities, women, persons with disabilities, immigrants, and the LGBTQQ communities, including health providers, advocates, and consumers.(6)Perform internal staff training, an internal assessment of cultural competency, and training of health care professionals to ensure more linguistically and culturally competent care.(7)Serve as a resource for ensuring that programs collect and keep data and information regarding ethnic and racial health statistics, including those statistics described in reports released by Healthy People 2020, and information based on sexual orientation, gender identity, and gender expression, strategies and programs that address multicultural health issues, including, but not limited to, infant and maternal mortality, cancer, cardiovascular disease, diabetes, human immunodeficiency virus (HIV), acquired immunodeficiency syndrome (AIDS), child and adult immunization, osteoporosis, menopause, and full reproductive health, asthma, unintentional and intentional injury, and obesity, as well as issues that impact the health of racial and ethnic communities, women, immigrants, and the LGBTQQ communities, including substance abuse, mental health, housing, teenage pregnancy, environmental disparities, immigrant and migrant health, and health insurance and delivery systems.(8)Encourage innovative responses by public and private entities that are attempting to address multicultural health issues.(9)Provide technical assistance to counties, other public entities, and private entities seeking to obtain funds for initiatives in multicultural health, including identification of funding sources and assistance with writing grants.(b)Notwithstanding Section 10231.5 of the Government Code, the State Department of Public Health shall biennially prepare and submit a report to the Legislature on the status of the activities required by this chapter. This report shall be included in the report required under paragraph (1) of subdivision (d) of Section 131019.5.(a)The State Department of Public Health Office of Health Equity within the State Department of Public Health shall do all of the following:
(1)Perform strategic planning to develop departmentwide plans for implementation of goals and objectives to close the gaps in health status and access to care among the states diverse racial and ethnic communities, women, persons with disabilities, immigrants, and the lesbian, gay, bisexual, transgender, queer, and questioning (LGBTQQ) communities.
(2)Conduct departmental policy analysis on specific issues related to multicultural health.
(3)Coordinate projects funded by the state that are related to improving the effectiveness of services to ethnic and racial communities, women, immigrants, and the LGBTQQ communities.
(4)Identify the unnecessary duplication of services and future service needs.
(5)Communicate and disseminate information and perform a liaison function within the department and to providers of health, social, educational, and support services to racial and ethnic communities, women, persons with disabilities, immigrants, and the LGBTQQ communities. The department shall consult regularly with representatives from diverse racial and ethnic communities, women, persons with disabilities, immigrants, and the LGBTQQ communities, including health providers, advocates, and consumers.
(6)Perform internal staff training, an internal assessment of cultural competency, and training of health care professionals to ensure more linguistically and culturally competent care.
(7)Serve as a resource for ensuring that programs collect and keep data and information regarding ethnic and racial health statistics, including those statistics described in reports released by Healthy People 2020, and information based on sexual orientation, gender identity, and gender expression, strategies and programs that address multicultural health issues, including, but not limited to, infant and maternal mortality, cancer, cardiovascular disease, diabetes, human immunodeficiency virus (HIV), acquired immunodeficiency syndrome (AIDS), child and adult immunization, osteoporosis, menopause, and full reproductive health, asthma, unintentional and intentional injury, and obesity, as well as issues that impact the health of racial and ethnic communities, women, immigrants, and the LGBTQQ communities, including substance abuse, mental health, housing, teenage pregnancy, environmental disparities, immigrant and migrant health, and health insurance and delivery systems.
(8)Encourage innovative responses by public and private entities that are attempting to address multicultural health issues.
(9)Provide technical assistance to counties, other public entities, and private entities seeking to obtain funds for initiatives in multicultural health, including identification of funding sources and assistance with writing grants.
(b)Notwithstanding Section 10231.5 of the Government Code, the State Department of Public Health shall biennially prepare and submit a report to the Legislature on the status of the activities required by this chapter. This report shall be included in the report required under paragraph (1) of subdivision (d) of Section 131019.5.
|
Date
|
Status
|
|---|---|
| Aug 16, 2018 | In committee: Held under submission. |
| Aug 6, 2018 | In committee: Referred to APPR. suspense file. |
| Jul 2, 2018 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun 28, 2018 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (June 27). |
| Jun 21, 2018 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on HEALTH. |
| Jun 7, 2018 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on HEALTH. |
| Jun 7, 2018 | Referred to Com. on HEALTH. |
| May 30, 2018 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 29, 2018 | Read third time. Passed. Ordered to the Senate. |
| May 25, 2018 | From committee: Do pass. (Ayes 16. Noes 0.) (May 25). |
| May 16, 2018 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| May 2, 2018 | Re-referred to Com. on APPR. |
| May 1, 2018 | Read second time and amended. |
| Apr 30, 2018 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 15. Noes 0.) (April 24). |
| Apr 17, 2018 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Apr 12, 2018 | Re-referred to Com. on HEALTH. |
| Apr 11, 2018 | From committee chair, with author's amendments: Amend, and re-refer to Com. on HEALTH. Read second time and amended. |
| Feb 12, 2018 | Referred to Com. on HEALTH. |
| Feb 6, 2018 | From printer. May be heard in committee March 8. |
| Feb 5, 2018 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 6, 2018 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 27, 2018 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Health |
Passed |
|
| May 29, 2018 | AB 2029 GARCIA, E. Assembly Third Reading | Assembly Floor |
Passed |
|
| May 25, 2018 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 24, 2018 | Do pass as amended, and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly 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
|
|---|---|---|
| Altura Centers For Health | ** Support | Jun 25, 2018 |
| Clinica De Salud Del Valle De Salinas | ** Support | Jun 25, 2018 |
| Clinicas Del Camino Real, Inc. | ** Support | Jun 25, 2018 |
| Community Health Centers Of The Central Coast | ** Support | Jun 25, 2018 |
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anthony Portantino, Chair
2017 - 2018 Regular Session
AB 2029 (Eduardo Garcia) - Federally Qualified Health Clinics: rural health clinics
Version: July 2, 2018 | Policy Vote: HEALTH 9 - 0 |
Urgency: No | Mandate: No |
Hearing Date: August 6, 2018 | Consultant: Samantha Lui |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
Requires, to the extent required under federal law, the Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) adjusted per-visit rate include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration. Requires the methodology of FQHC and RHC to exclude a per- visit payment limitation and a provider productivity standard. Requires Medi-Cal managed care incentive payments to be excluded from the wrap around payment calculation when FQHC or RHC services are partially reimbursed by a Medi-Cal managed care plan. Requires that FQHC or RHC services rendered to a Medi-Cal beneficiary at a location other than the clinic’s primary license address, be billed and reimbursed at the contracted rate, under specified scenarios.
Fiscal Impact:
Staff notes the following estimate includes a degree of uncertainty as the fiscal depends on the total number of clinics who elect to submit a scope-of-service change and frequency at which those scope-of-service changes are submitted.
- Indeterminate but significant costs to Medi-Cal (General Fund/federal fund), as clinics, through the bill’s expanded definitions of “visit” beyond the clinic’s four-walls and scope-of-practice change requests, and increased time extensions for clinics to filed changes, could receive likely higher reimbursement rates.
- Unknown administrative increased costs to DHCS (likely in the tens to hundreds of thousands, GF/federal) to recalculate additional rates based on scope-of-service change requests. The average cost to recalculate is $10,000 per recalculation. If 20 additional clinics submit a request for a recalculation of their rates, it could cost DHCS about $200,000 (GF/federal) in staff time to process the requests.
Background:
- FQHCs and RHCs provide primary care (and some provide dental and behavioral health services), and are a core component of the Medi-Cal program. There are approximately 1,040 FQHCs and approximately 283 RHCs in California. The number of FQHCs has grown significantly. In 2006, there were 476 FQHC service sites, which grew to 1007 in 2015. As the number of FQHC service sites has expanded and as Medi-Cal enrollment has grown, the number of Medi-Cal reimbursed FQHC visits has also increased, increasing 5.9 million in 2008 to 11.9 million in 2014.
Medi-Cal reimbursement to FQHCs and RHCs is governed by state and federal law. FQHCs and RHCs are reimbursed by Medi-Cal on a cost-based per-visit rate under what is known as the prospective payment system (PPS). For Medi-Cal managed care plan patients, DHCS reimburses FQHCs and RHCs for the difference between its per-visit PPS rate and the payment made by the plan. This payment is known as a “wrap around” payment. The Medi-Cal managed care wrap-around rate was established to reimburse providers for the difference between their PPS rate and their Medi-Cal managed care reimbursement rate. The mean and median PPS rate paid to an FQHC ($207.98 and $182.23 respectively) and an RHC ($159.73 and $141.98 respectively) is considerably higher than the most common primary care visit fee-for-service reimbursement rates in Medi-Cal. Because FQHCs and RHCs are required to receive a cost-of-living adjustment to their rates (under the Medicare Economic Index) and because of their role in providing primary care access to the Medi-Cal population, FQHCs and RHCs have been exempted from the various Medi-Cal rate reductions enacted in 2008-2011.
Federal Medicaid law requires FQHC rates to be adjusted to take into account any increase or decrease in the scope of services furnished by the center or clinic during a particular fiscal year.
Proposed Law:
Assembly Bill 2029 includes the following provisions, among others:
- Requires the methodology of Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) to exclude a per- visit payment limitation and a provider productivity standard.
- Requires, to the extent required under federal law, the FQHC and RHC adjusted per-visit rate to include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration.
- Adds the following circumstances to apply to the existing definition of a change in scope of service, the following:
- A change related to a Medi-Cal managed care plan contracting that either directly or indirectly impacts an FQHC or RHC;
- An increase in service intensity attributable to adult patients being served;
- The adoption, implementation, or upgrade of a certified electronic health record system, at the center or clinic; and,
- Any HRSA-approved changes in the scope of a project to include FQHC and RHC services rendered outside of the respective FQHC or RHC facility.
- Requires Medi-Cal managed care incentive payments to be excluded from the wrap-around payment calculation when FQHC or RHC services are partially reimbursed by a Medi-Cal managed care plan.
- Lengthens the time frame for when an FQHC or RHC that discontinues providing onsite pharmacy or dental services is required to submit a scope-of-service rate change request to any time during the following fiscal year that the FQHC or RHC discontinued providing the services, instead of from within 90 days of the beginning of the following fiscal year.
- Requires that FQHC or RHC services rendered to a Medi-Cal beneficiary at a premise, such as a temporary shelter, a be a beneficiary’s residence, a location of another provider, or any location other than the location identified on the primary care clinic license or in the provider master file, shall be billed by the FQHC or RHC and reimbursed at the contracted rate when either of the following apply:
- The location where the services are provided is approved by the federal Health Resources and Services Administration as part of the FQHC’s or RHC’s application for its grant under The Community Health Center Program.
- The services are provided at a location requiring payment under Medicaid.
- Requires DHCS to ensure that audit staff receives appropriate training on FQHC and RHC program policies and procedures within Medi-Cal, including federal and state legislative history on statutory and regulatory provisions governing the program. The training must be incorporated into existing training opportunities and is not construed to increase DHCS obligations.
Related Legislation:
- SB 1125 (Atkins, 2018) requires Medi-Cal reimbursement for a maximum of two visits taking place on the same day at a single location of an FQHC and RHC to be reimbursed when the patient has a medical visit and a mental health visit or a dental visit on the same day. SB 1125 is pending consideration in the Assembly Appropriations Committee.
- AB 2428 (Gonzalez Fletcher, 2018) allows a FQHC or RHC that adds an additional physical plant to its primary care license to elect to have the Medi-Cal reimbursement rate for each new plant be billed at and reimbursed at the same rate as the FQHC or RHC. AB 2384 is on the Senate Appropriations Committee suspense file.
- SB 456 (Pan, 2017) would have required compensation paid to a FQHC or RHC for services that follow the patient (as defined) to be supplemental to, and separate from, the FQHC or RHC’s PPS rate and not subject to a reconciliation or to any reduction. SB 456 was held under submission on the Assembly Appropriations Committee suspense file.
- SB 323 (Mitchell, Chapter 540, Statutes of 2017), among other provisions, authorizes FQHCs and RHCs to provide Drug Medi-Cal services pursuant to the terms of a mutually agreed upon contract entered into between the FQHC or RHC and the county or county designee, or DHCS, as specified, and would set forth the reimbursement requirements for these services.
- SB 1427 (Chesbro, 2008) would have allowed an FQHC to bill the Medi-Cal program for FQHC services delivered in locations other than the FQHC’s site or sites by a provider who is an employee or a contracted member of the staff of the FQHC if specified requirements were met, including that the FQHC services are provided in the offsite location, rather than at the FQHC’s site or sites, for health or medical reasons. Governor Brown vetoed the bill and directed DHCS to “work with stakeholders and the Legislature on statutory changes to provide FQHCs flexibility to bill for services provided outside the site, while maintaining appropriate controls to protect program integrity, and ensuring health centers will continue operating within licensing laws and regulations.”
-- END --
SENATE COMMITTEE ON HEALTH
Senator Richard Pan, Dr., Chair
BILL NO: AB 2029
AUTHOR: | Eduardo Garcia | ||
VERSION: | June 21, 2018 | ||
HEARING DATE: | June 27, 2018 | ||
CONSULTANT: | Scott Bain | ||
SUBJECT: Federally Qualified Health Clinics: rural health clinics
SUMMARY:
Requires the methodology of Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) the adjusted per-visit rate to exclude a per- visit payment limitation and a provider productivity standard. Requires, to the extent required under federal law, the FQHC and RHS adjusted per-visit rate to include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services and the federal Health Resources and Services Administration. Requires Medi-Cal managed care incentive payments to be excluded from the wrap around payment calculation when FQHC or RHC services are partially reimbursed by a Medi-Cal managed care plan.
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. [WIC §14000, et seq. §14132, 42 U.S.C. §1396d]
- 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. Medi-Cal payments to FQHCs and RHCs are made under what is known as the Prospective Payment System (PPS). [WIC §14132.100]
- Prohibits, under federal Medicaid law, a State Medicaid Plan from containing a provision that prevents a FQHC from entering into contractual relationships with private practice dental providers in the provision of FQHC services. [42 U.S.C. §1396a]
- Permits 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. Defines a “change in the scope of service,” subject to specified condition, to include, among other things, the following:
- A change in service due to amended regulatory requirements or rules;
- 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;
- Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the FQHC and RHC services as referenced in federal law, including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the FQHC/RHC; and,
- Any changes in the scope of a project approved by the federal Health Resources and Services Administration (HRSA). [WIC §14132.100]
- Prohibits a change in costs from, in and of itself, being considered a scope-of-service change unless all of the following apply:
- The increase or decrease in cost is attributable to an increase or decrease in the scope of services;
- The cost is allowable under Medicare reasonable cost principles, or its successor;
- The change in the scope of services is a change in the type, intensity, duration, or amount of services, or any combination thereof; and,
- The net change in the FQHC’s or RHC’s rate equals or exceeds 1.75% for the affected FQHC or RHC site.
- 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, as set forth in specified provisions of the Code of Federal Regulations (CFR) or its successor. [WIC §14132.100]
- Permits an FQHC or RHC to submit requests for scope-of-service changes once per fiscal year, only within 90 days following the beginning of the FQHC’s or RHC’s fiscal year. [WIC §14132.100]
- Requires an FQHC or RHC to submit a scope-of-service rate change request within 90 days of the beginning of any FQHC or RHC fiscal year, if, during the FQHC’s or RHC’s prior fiscal year, the FQHC or RHC experienced a decrease in the scope of services provided that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate.
- Requires 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 each have its Medi-Cal reimbursement rate established in accordance with one of three methods, as selected by the FQHC or RHC. Permits DHCS to adopt any further and additional methods of setting reimbursement rates for a newly qualified pursuant to a specified provision of federal Medicaid law.
- Requires, if FQHC or RHC services are partially reimbursed by a third-party payer (such as a managed care entity), DHCS to reimburse an FQHC or RHC for the difference between its per-visit prospective payment systems (PPS) rate and receipts from other plans or programs on a contract-by-contract basis and not in the aggregate. Requires managed care financial incentive payments that are required by federal law to be excluded from this calculation. [WIC §14132.100]
- Requires DHCS to administer a program to ensure that total payments to FQHCs and RHCs operating as managed care subcontractors comply with federal law. 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 whereby the FQHC and RHC submits 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 center received from the managed care health plan and either the interim rate established by DHCS based on the center’s or clinic’s reasonable cost or the center’s PPS rate. This DHCS payment to the FQHC or RHC is referred to as the “wrap around” payment. [WIC §14087.325]
- Requires DHCS to perform, to the extent feasible, within six months of the end of the FQHC or RHC’s fiscal year, an annual reconciliation to reasonable cost, and make payments to, or obtain a recovery from, the FQHC or RHC. [WIC §14087.325]
This bill:
- Requires FQHC and RHC rate changes based on a change in the scope of services provided by an FQHC or RHC to also be evaluated in accordance with federal reasonable cost reimbursement principles, as set forth in federal regulations which set forth standards and requirements for the audit of non-federal entities expending federal awards (known as the “Uniform Guidance”), in addition to the Medicare reasonable cost principles in existing law.
- Requires, to the extent required under federal law, the FQHC and RHS adjusted per-visit rate to include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility, consistent with guidance issued by the federal Centers for Medicare and Medicaid Services (CMS) and HRSA.
- Requires the methodology of the FQHC and RHC adjusted per-visit rate to exclude a per- visit payment limitation and provider productivity standard.
- Requires Medi-Cal managed care incentive payments to be excluded from the wrap around payment calculation when FQHC or RHC services are partially reimbursed by a Medi-Cal managed care plan. Defines “financial incentive payments” to include, but are not limited to, monetary payments to the FQHCs or RHCs by a third-party payor for superior contract performance, such as improving health outcomes, reducing overall cost of care, or increasing the quality of care.
- Requires DHCS, in the case of services furnished by an FQHC or RHC pursuant to a contract between the FQHC or RHC and the managed care entity, to reimburse the FQHC or RHC in accordance with a specified provision of federal Medicaid law establishing requirements for payments to FQHCs and RHCs.
- Includes an additional option under which 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 has for its Medi-Cal reimbursement rate determined, This additional option would allow the FQHC or RHC to elect the new rate to be calculated on a per-visit basis in an amount that is equal to the average of the per-visit rates of three comparable FQHC or RHC sites with a similar caseload associated with the FQHC or RHC.
- Includes within the definition of a change in scope of service, subject to the criteria in 4) in existing law, the following:
- A change related to a Medi-Cal managed care plan contracting that either directly or indirectly impacts an FQHC or RHC;
- An increase in service intensity attributable to adult patients being served;
- The adoption, implementation, or upgrade of a certified electronic health record system, at the center or clinic; and,
- Any HRSA-approved changes in the scope of a project to include FQHC and RHC services rendered outside of the respective FQHC or RHC facility.
- Requires DHCS, in considering a scope-of-service change, to also consider an increase in administrative costs attributable to an increase or decrease in the scope of services.
- Lengthens the time frame in which FQHCs and RHCs are allowed to submit requests for scope-of-service changes to once per fiscal year to any time following the beginning of the fiscal year, instead of only within 90 days following the beginning of the FQHC’s or RHC’s fiscal year.
- Lengthens the timeframe in which FQHC or RHC are allowed to submit requests for a scope-of-service change related to Drug Medi-Cal and specialty mental health services to any time during the FQHC’s or RHC’s fiscal year, instead of only within 90 days following the beginning of the FQHC or RHC fiscal year.
- Lengthens the time in which an FQHC or RHC is required to submit a scope-of-service rate change request to any time in the fiscal year, instead of from within 90 days of the being of the FQHC or RHC fiscal year, when the FQHC or RHC experienced a decrease in the scope of services in the prior fiscal year that the FQHC or RHC either knew or should have known would have resulted in a significantly lower per-visit rate.
- Lengthens the time frame for when an FQHC or RHC that discontinues providing onsite pharmacy or dental services is required to submit a scope-of-service rate change request to any time during the following fiscal year that the FQHC or RHC discontinued providing the services, instead of from within 90 days of the beginning of the following fiscal year.
- Modifies one of the options for establishing the Medi-Cal rate for any newly qualified FQHC or RHC by requiring the new rate to be effective retroactively to the date that the entity met the definition of an FQHC or RHC as identified under federal law, instead of having the new rate be effective retroactively when the FQHC or RHC was first qualified by the applicable federal agency in existing law.
- Requires DHCS to ensure that staff conducting audits of FQHCs and RHCs receive appropriate training on FQHC and RHC program policies and procedures within the Medi-Cal program, including the federal and state legislative history on statutory and regulatory provisions governing the program, and the grant parameters set forth under Section 330 of the federal Public Health Service Act.
- Requires this training to be incorporated into existing training opportunities available under DHCS’ current budget for the purpose of improving the quality and integrity of DHCS’ audit process related to the FQHC and RHC provider. Prohibits this provision from being construed to increase DHCS obligations.
FISCAL EFFECT:
According to the Assembly Appropriations Committee analysis of a prior more narrow version of this bill:
- To the extent clinics submit additional scope-of-service based solely on electronic health record (EHR) system changes to reflect higher costs, these clinics will likely receive higher reimbursement rates, with an unknown but likely significant cost to Medi-Cal (General Fund (GF)/federal).
- Unknown increased costs to DHCS to recalculate additional rates based on scope-of-service change requests. The average cost to recalculate is $10,000 per recalculation. If 20 additional clinics submit a request for a recalculation of their rates, it would cost DHCS about $200,000 (GF/federal) in staff time to process the requests.
PRIOR VOTES:
Assembly Floor: | 78 - 0 |
Assembly Appropriations Committee: | 16 - 0 |
Assembly Health Committee: | 15 - 0 |
COMMENTS:
- Author’s statement. According to the author, over the last eight years, DHCS has been making many interpretations that undermine the "reasonable cost" standard established by federal law. DHCS has been legislating through annual audits in finding unallowable costs that contradict the intent, spirit and case law of the reasonable cost standard. This has included several provisions including not allowing all costs for updating or changing emergency medical record systems, and not allowing administrative costs at each clinic site and only at the central office. The PPS establishes a provider’s payment rates for a service before the service is delivered. The PPS is determined separately for each individual FQHC or RHC (calculated on a per-visit basis) and does not include any adjustment factors other than a growth rate to account for inflation and a change in the scope of services furnished during the fiscal year. At no time since the FQHC program was created has the federal government deviated from the foundation for reimbursing this health centers based on reasonable costs. To date, it has been these provisions of law and cases brought before the federal court that have established the reasonable cost standards for health centers in California and the nation.
- Background on FQHCs and RHCs. FQHCs and RHCs provide primary care (and some provide dental and behavioral health services), and are a core component of the Medi-Cal program. There are approximately 1,040 FQHCs and approximately 283 RHCs in California. The number of FQHCs has grown significantly. In 2006, there were 476 FQHC service sites, which grew to 1007 in 2015. As the number of FQHC service sites has expanded and as Medi-Cal enrollment has grown, the number of Medi-Cal reimbursed FQHC visits has also increased, increasing 5.9 million in 2008 to 11.9 million in 2014.
Medi-Cal reimbursement to FQHCs and RHCs is governed by state and federal law. Medicaid payment rules for FQHCs differ from those for other providers. For example, federal law requires payments to be reasonable and related to the cost of furnishing services, to be calculated on a per visit basis, to be increased by the percentage increase in the Medicare Economic Index for primary care services, and adjusted to take into account any increase or decrease in the scope of services furnished by the center or clinic during that fiscal year. The Congressional purpose in establishing FQHC and RHC payment provisions in federal was to ensure federal Section 330 grant funds were not used to cover the cost of serving Medicaid patients. - Provider productivity standards and per visit payment limitation. This bill requires the methodology of the adjusted per-visit rate paid to FQHCs and RHCs to exclude a per visit payment limitation or a provider productivity standard. The language on this provision was modeled on a provision of the Affordable Care Act in which Congress directed CMS to cease using productivity standards and other official cost caps or limitations for Medicare PPS. The language in in this bill is to prohibit similar limitations in Medi-Cal. Current state law does not authorize DHCS to establish a per visit payment limitation. Current state law does not authorize DHCS to establish, or require FQHCs and RHCs to meet, a provider productivity standard.
Clinic representatives indicate several years ago DHCS began applying a productivity standard to FQHC rate setting using a minimum productivity standard for physicians and mid-level providers of an average of 4,200 visits and 2,100 visits, respectively each year. However, CMS subsequently updated its guidance to state that FQHCs are not subject to provider productivity standards (effective February 1, 2016). Clinic representative indicate DHCS began applying this federal productivity standard to FQHCs despite the fact that FQHCs are not subject to the standards federally, and despite the fact that California state law or regulation does not authorize DHCS to apply this, or any other, standard.
In March 2018, DHCS submitted a State Plan Amendment 18-003 (SPA 18-003) adding marriage and family therapists (MFTs) as a new billable provider. As part of that SPA, DHCS also included other FQHC-related provisions, including a provider productivity standard. The provider productivity in SPA 18-003 was lower than the prior productivity standard, as it set the standard at 3,200 visits per full-time equivalent (FTE) physician and 2,600 visits per mid-level providers, with an exemption request process. SPA 18-003 is pending with CMS.
- FQHC/RHC change in scope of service. Federal Medicaid law requires FQHC rates to be adjusted to take into account any increase or decrease in the scope of services furnished by the center or clinic during a particular fiscal year. This bill makes changes to the existing state law provisions on when FQHCs and RHCs can apply for an adjustment to their per visit rate based on a change in the scope of service, primarily in response to another provision of SPA 18-003 and DHCS administrative decisions that restrict what are considered FQHC and RHC costs. For example, in addition to the provider productivity and MFT provisions, SPA 18-003 also contains a provision that would prohibit, once the cost of an electronic medical records and/or electronic dental records system is included in an FQHC’s or RHC’s per visit rate, the FQHC or RHC from applying for an adjustment to its per-visit rate solely due to a subsequent acquisition or upgrade of the electronic medical and/or dental records system. This bill contains language seeking to prevent this limitation from occurring by allowing FQHCs to submit a change in the scope of service to allow for the adoption, implementation, or upgrade of a certified electronic health record system.
- Managed care incentive payments. This bill excludes Medi-Cal managed care incentive payments from the wrap around payment calculation when FQHC or RHC services are partially reimbursed by a plan in response to a recent court decision. Financial incentive payments are defined in this bill to include, but are not limited to, monetary payments to the FQHCs or RHCs for superior contract performance, such as improving health outcomes, reducing overall cost of care, or increasing the quality of care.
For Medi-Cal managed care plan patients, DHCS is required to reimburse an FQHC and a RHC 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. For example, if an FQHC had a PPS rate of $150, and the health plan paid the FQHC a rate of $60 for a visit, the wrap around payment from DHCS would be $90. The Medi-Cal managed care wrap-around rate was established to comply with state and federal requirements for reimbursement to an FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
An April 2018 Sacramento Superior Court decision ruling in County of San Mateo v. Director of the California Department of Health Care Services adversely impacted the wrap around payment amounts paid to FQHCs receiving quality incentive payments from plans. Health Plan of San Mateo (HPSM is the county organized health system plan for Medi-Cal beneficiaries) had a “pay for performance” (P4P) program, in which the plan made additional payments to its providers for certain activities, such as offering extended office hours, billing correctly, performing annual teen well visits and women’s health exams, performing initial health assessments and other activities. One of the HPSM’s providers was San Mateo Medical Center, a public hospital and FQHC. If the Center completed any of these additional activities, it received a payment based on either a flat dollar amount or a percentage of the Center’s capitation payment. When a DHCS auditor performed the PPS reconciliation review, the auditor included the P4P payments in the amount the Center received from the HPSM, which resulted in a substantially lower wrap around payment from DHCS than the Center had calculated it would receive.
An initial Administrative Law Judge proposed decision granted San Mateo County’s appeal that the that P4P payments should not have been included in to wrap around payment calculation. However, DHCS rejected the proposed decision, and on January 2017, issued a final decision denying the appeal via an alternative decision by the Chief Administrative Law Judge, finding that the P4P payments did not fit the definition of “financial incentives” for purposes of excluding the payments from the calculation of the wrap around payments. On appeal, a Sacramento Superior Court denied San Mateo’s request for a writ of administrative mandate, finding that the P4P payments do not qualify as a financial incentive.
The effect of the San Mateo ruling and the distinction between quality incentive payments and financial incentives is to dis-incentivize FQHC and RHC participation in quality incentive programs because any additional funds the center might receive from a plan for meeting quality-related performance targets will be reduced through the reconciliation process. - Change to reasonable cost principles. Existing law requires DHCS to evaluate rate changes based on a change in the scope of services provided by an FQHC or RHC in accordance with Medicare reasonable cost principles. This bill would add language to this provision that rate changes would be evaluated in accordance with the existing Medicare reasonable cost principles and federal reasonable cost reimbursement principles set forth in what is known as the “Uniform Guidance.” The Uniform Guidance was intended to create uniformity in federal programs, and according to bill proponents, were issued later, and are more clear, easy to understand and provide a comprehensive discussion of both principles and specific items of cost compared to the Medicare reasonable cost reimbursement principles. This change is also intended to enable FQHCs to operate under a common set of cost principles for all their grant programs.
- Prior legislation. SB 323 (Mitchell, Chapter 540, Statutes of 2017) authorizes FQHCs and RHCs to provide Drug Medi-Cal services pursuant to the terms of a mutually agreed upon contract entered into between the FQHC or RHC and the county or county designee, or DHCS, as specified, and would set forth the reimbursement requirements for these services. Authorizes an FQHC or RHC to provide specialty mental health services to Medi-Cal beneficiaries as part of a mental health plan’s provider network pursuant to the terms of a mutually agreed upon contract entered into between the FQHC or RHC and one or more mental health plans. Prohibits the costs associated with providing Drug Medi-Cal services or specialty mental health services from being included in the FQHC’s or RHC’s per-visit PPS rate, and would require the costs associated with providing Drug Medi-Cal services or specialty mental health services to be adjusted out of the FQHC’s or RHC’s clinic base PPS rate as a scope-of-service change if the costs associated with providing Drug Medi-Cal services or specialty mental health services are within the FQHC’s or RHC’s clinic base PPS rate, as specified.
SB 1427 (Chesbro of 2008) would have allowed an FQHC to bill the Medi-Cal program for FQHC services delivered in locations other than the FQHC’s site or sites by a provider who is an employee or a contracted member of the staff of the FQHC if specified requirements were met, including that the FQHC services are provided in the offsite location, rather than at the FQHC’s site or sites, for health or medical reasons. This bill was vetoed by the Governor. In his veto message, the Governor stated this bill would unintentionally create a loophole that may compromise program integrity and expose the State to more than a billion dollars in costs. He directed DHCS to work with stakeholders and the Legislature on statutory changes to provide FQHCs flexibility to bill for services provided outside the site, while maintaining appropriate controls to protect program integrity, and ensuring health centers will continue operating within licensing laws and regulations. - Related legislation. SB 1125 (Atkins) requires Medi-Cal reimbursement for a maximum of two visits taking place on the same day at a single location of an FQHC and RHC to be reimbursed when the patient has a medical visit and a mental health visit or a dental visit on the same day. Makes this change continent upon an appropriation in the annual Budget Act. Codifies the existing requirement that acupuncture visits are Medi-Cal reimbursable to FQHCs and RHCs on a per-visit basis. SB 1125 is scheduled for hearing in the Assembly Health Committee on June 26, 2018.
SB 456 (Pan) would have required compensation paid to a FQHC or RHC for services that follow the patient (as defined) to be supplemental to, and separate from, the FQHC or RHC’s PPS rate and not subject to a reconciliation or to any reduction. SB 456 was held on the Assembly Appropriations Committee suspense file.
AB 2428 (Gonzalez Fletcher) allows a FQHC or RHC that adds an additional physical plant to its primary care license to elect to have the Medi-Cal reimbursement rate for each new plant be billed at and reimbursed at the same rate as the FQHC or RHC. AB 2384 passed the Senate Health Committee by a vote of 8-0 on June 13, 2018.
AB 2576 (Aguiar-Curry) would require, during or immediately following a state of emergency, Medi-Cal to reimburse for telehealth, telephone, and all Medi-Cal covered benefit services that are otherwise reimbursable to an enrolled community clinic but that are provided somewhere other than on the enrolled community clinic’s premises, including, but not limited to, services provided at a temporary shelter, a patient’s home, or any location other than the location identified on the primary care clinic license or in the provider master file, if the services are provided somewhere located within the boundaries of the emergency proclamation. AB 2576 passed the Senate Health Committee by a vote of 9-0 on June 20, 2018.
- Support. Several FQHCs write in support of this bill that the goal of this measure is to confirm and codify federal and case law standards on “reasonable costs” for FQHCs that Congress passed and has consistently reinforced since 2000. Supporters argue this bill will allow FQHCs to continue to provide access to comprehensive, preventive medical care to the working poor, uninsured, and under-insured. With changes to the ACA that will increase the premiums for health insurance under this program, the supporters anticipate that there will be an increase in uninsured persons seeking care at all FQHCs, as these centers serve all types of communities, rural and urban alike, and any person who comes through our doors regardless of their ability to pay.
- Drafting clarifications:
- Language on reasonable cost reimbursement principles. The inclusion of the additional reference to reasonable cost reimbursement principles would appear to result in rate changes being evaluated under both Medicare reasonable cost principles and the additional Uniform Guidance reasonable cost reimbursement principles, when it appears the intent is to use the more recently issued Uniform Guidance as the primary guidance in determining reasonable cost principles. To address this issue, the author is proposing the following language (page 3, lines 13-20):
(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 federal reasonable cost reimbursement principles, as set forth in Part 75 (commencing with Section 400) of Title 45 and Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations, or anyits - Services outside of the four walls. This bill requires the adjusted per-visit rate to include direct costs, administrative costs, and costs related to FQHC and RHC services rendered outside of the respective facility to the extent required by federal law, but does not explicitly require Medi-Cal payment for FQHC or RHC services at locations outside the four walls of the center. To clarify the author’s intent on this issue, the author is proposing the following language (page 7, lines 5-23):
- Language on reasonable cost reimbursement principles. The inclusion of the additional reference to reasonable cost reimbursement principles would appear to result in rate changes being evaluated under both Medicare reasonable cost principles and the additional Uniform Guidance reasonable cost reimbursement principles, when it appears the intent is to use the more recently issued Uniform Guidance as the primary guidance in determining reasonable cost principles. To address this issue, the author is proposing the following language (page 3, lines 13-20):
(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, 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 plan’s definition of an FQHC or RHC visit. All covered benefit services that are otherwise reimbursable to an FQHC but that are provided somewhere other than on the FQHC’s premises, including, but not limited to, services provided at a temporary shelter, a patient’s home, another provider, or any location other than the location identified on the primary care clinic license or in the provider master file, if the location where the services are provided are either approved by the U.S. Health Resources and Services Administration as part of the FQHC’s application for its grant under Section 330 of the Public Health Services Act or the services are provided at a location requiring payment under Title XIX of the Social Security Act.
- Per visit payment limitation clarification. This bill requires the methodology of the adjusted per-visit rate paid to FQHCs and RHCs to exclude a per visit payment limitation. To clarify that this provision is focused on the accounting standards and what is counted in a per visit calculation, the author is proposing the following clarification (page 3, lines 13-28):
- Per visit payment limitation clarification. This bill requires the methodology of the adjusted per-visit rate paid to FQHCs and RHCs to exclude a per visit payment limitation. To clarify that this provision is focused on the accounting standards and what is counted in a per visit calculation, the author is proposing the following clarification (page 3, lines 13-28):
The methodology of the adjusted per-visit rate shall exclude a per- visit payment limitation and provider productivity standard or any other method that applies cost limitations in the calculation of the per-visit rate that are not based on the reasonable cost of the individual FQHC as determined under applicable federal reasonable cost principles.
SUPPORT AND OPPOSITION:
Support: Altura Centers for Health
Clinica de Salud del Valle de Salinas
Clinicas del Camino Real, Inc.
Community Health Centers of the Central Coast
Oppose: None received
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 2029
Author:(Eduardo Garcia)
As Amended Ver:May 1, 2018
Majority vote
Committee | Votes | Ayes | Noes |
Health | 15-0 | Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Rodriguez, Santiago, Thurmond, Waldron | |
Appropriations | 16-0 | Gonzalez Fletcher, Bigelow, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Fong, Friedman, Gallagher, Eduardo Garcia, Nazarian, Obernolte, Quirk, Reyes |
|
SUMMARY: Expands the definition of a change in service scope relating to operating costs attributable to capital expenditures to include the adoption, implementation, or upgrade of a certified electronic health system.
FISCAL EFFECT: According to the Assembly Appropriations Committee analysis:
- To the extent clinics submit additional scope-of-service based solely on electronic health record (EHR) system changes to reflect higher costs, these clinics will likely receive higher reimbursement rates, with an unknown but likely significant cost to Medi-Cal (General Fund (GF)/federal).
- Unknown increased costs to the Department of Health Care Services (DHCS) to recalculate additional rates based on scope-of-service change requests. The average cost to recalculate is $10,000 per recalculation. If 20 additional clinics submit a request for a recalculation of their rates, it would cost DHCS about $200,000 (GF/federal) in staff time to process the requests.
COMMENTS: According to the author, federally qualified health centers (FQHCs) have been indispensable and vital to providing unprecedented health care services to many, many rural and farm worker communities in his Assembly district. DHCS audit actions are imposing their rules and regulations which are not consistent with federal law, practice and federal case law around the definition of "reasonable costs." If DHCS continues with this legislating by audits it will cause irreparable harm to FQHCs and the focus and mission of creating access to comprehensive primary health care services. These services have only recently begun to be extended to communities who have never had much access to these services if any access at all.
FQHCs and rural health centers (RHCs) serve a significant portion of the uninsured and underinsured in California. They are open-door providers that treat patients on a sliding scale fee structure and make their services available regardless of a patient's ability to pay. There are approximately 600 FQHCs and 350 RHCs in California. All FQHCs, and a majority of the RHCs, are either non-profit community clinics or government entities. Because these clinics are safety net providers, their continued survival depends heavily on the stability and adequacy of revenues from the Medi-Cal program.
FQHCs and RHCs are paid by Medi-Cal on a "per visit" basis in an amount equal to the clinic's cost of delivering services. Essentially, DHCS calculates the annual cost of care provided by each clinic and divides the total by the number of visits to determine a per visit rate. A "visit" requires a face-to-face encounter between a FQHC or RHC patient and specified health care providers. Reimbursement to FQHCs and RHCs is governed by both state and federal law. For Medi-Cal managed care plan patients, DHCS reimburses FQHCs and RHCs for the difference between its per-visit prospective payment system (PPS) rate and the payment made by the plan. This payment is known as a "wrap around" payment.
This bill would expand the definition of a change in service scope relating to operating costs attributable to capital expenditures to include the adoption, implementation, or upgrade of a certified electronic health system. Under existing law, a FQHC or rural health center may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by a FQHC or RHC. A change in scope of services includes any of the following:
- The addition of a new FQHC/RHC service that is not incorporated in the baseline PPS rate, or a deletion of an FQHC/RHC service that is incorporated in the baseline rate;
- A change in service due to amended regulatory requirements or rules;
- A change in service resulting from relocating or remodeling an FQHC or RHC;
- A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic;
- An increase in service intensity attributable to changes in the types of patients served, including but not limited to populations with human immunodeficiency syndrome (HIV) or acquired immunodeficiency syndrome (AIDS), or other chronic diseases, or homeless, elderly, migrant, or other special populations;
- Any changes in any of the services, as specified, or in the provider mix of an FQHC or RHC or one of its sites;
- Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services, as specified, including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic;
- Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents; and,
- Any changes in the scope of a project approved by the federal Health Resources and Service Administration.
Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0003159
Date of Hearing: May 16, 2018
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
ABPCA Bill Id:AB 2029
Author:(Eduardo Garcia) – As Amended Ver:May 1, 2018
Policy Committee: | Health | Vote: | 15 - 0 |
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
For purposes of establishing a new facility-specific Medi-Cal reimbursement rate for a clinic, this bill specifies a change in scope of service includes changes in operating costs attributable to the adoption, implementation, or upgrade of a certified electronic health record (EHR) system at the clinic.
FISCAL EFFECT:
- To the extent clinics submit additional scope-of-service based solely on EHR system changes to reflect higher costs, these clinics will likely receive higher reimbursement rates, with an unknown but likely significant cost to Medi-Cal (GF/federal).
- Unknown increased costs to DHCS to recalculate additional rates based on scope-of-service change requests. The average cost to recalculate is $10,000 per recalculation. If 20 additional clinics submit a request for a recalculation of their rates, it would cost DHCS about $200,000 (GF/federal) in staff time to process the requests.
COMMENTS:
- Purpose. In a draft state plan amendment application (SPA) to be submitted to the federal government, DHCS has proposed to include their existing policy related to scope-of-service changes for clinic reimbursement as it relates to EHR systems. Specifically, DHCS proposes the following:
Once the cost of any electronic medical records and electronic dental records are included in an FQHC’s or RHC’s per-visit rate, the FQHC or RHC may not apply for an adjustment to its per-visit rate solely due to a subsequent acquisition and implementation of any electronic medical and dental records. (SPA 18-003)
This bill seeks to prevent the proposed changes. In essence, this would allow clinics to apply for a scope-of-service change solely based on the costs of upgrading electronic medical records technology.
- Clinic Reimbursement. Because of community clinics 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, to pay clinics using a special cost-based 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. PPS rates are also adjusted by a growth rate to account for inflation.
Existing law also allows, and in some cases requires, clinics to request a recalculation of their PPS rates based on a change in their scope of services, as defined in law. One provision allows such requests to be made based on:
Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the [clinic services], including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic.
This bill would specify "changes in technology" includes electronic medical records adoption, implementation, or upgrade. DHCS's policy is that subsequent changes to an EHR system cannot be the sole reason for a scope-of-service change request, but increased costs associated with EHR upgrades will be reflected in a clinic's new rate if a valid scope-of-service change is submitted for an unrelated reason.
- Related Legislation. AB 2428 (Gonzalez Fletcher), pending on the Assembly Floor, makes a conforming change to reimbursement rules for clinics that elect a consolidated license structure for a single clinic with multiple physical plants.
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
Date of Hearing: April 24, 2018
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
ABPCA Bill Id:AB 2029
Author:(Eduardo Garcia) – As Amended Ver:April 11, 2018
SUBJECT: Federally Qualified Health Clinics: rural health clinics.
SUMMARY: Expands the definition of a change in service scope relating to operating costs attributable to capital expenditures to include the adoption, implementation, or upgrade of a certified electronic health system. Requires the Department of Health Care Services (DHCS) to require a federally qualified health center (FQHC) to participate in the 340B discount drug purchasing program (340B Program), to the extent permitted by federal law. Requires DHCS to maintain the 340B Program for purpose of maximizing FQHC funding opportunities.
EXISTING LAW:
- Establishes the Medi-Cal program to provide comprehensive health benefits to low-income persons administered by DHCS.
- Establishes a statutory structure for Medi-Cal payments being made under the prospective payment system (PPS). Specifies that these payments are for services provided by FQHCs and rural health centers (RHCs) on a per-visit basis with rates determined prospectively.
- Identifies those services that may be reimbursed as services identified in federal law as covered benefits for FQHCs and RHCs.
- Defines visit as a face to face encounter with a physician, physician assistant, nurse practitioner, certified nurse midwife, clinical psychologist, licensed clinical social worker, visiting nurse, osteopath, podiatrist, dentist, dental hygienists, optometrist, chiropractor, comprehensive perinatal services practitioner, or adult day health care center. Authorizes other providers if identified in the state plan.
5) Allows only one visit per day to be reimbursed by Medi-Cal, except for a subsequent visit by a patient to a dental provider.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.
COMMENTS:
- PURPOSE OF THIS BILL. According to the author, FQHC’s have been indispensable and vital to providing unprecedented health care services to many, many rural and farm worker communities in his Assembly district. DHCS audit actions are imposing their rules and regulations which are not consistent with federal law, practice and federal case law around the definition of “reasonable costs.” If DHCS continues with this legislating by audits it will cause irreparable harm to FQHCs and the focus and mission of creating access to comprehensive primary health care services. These services have only recently begun to be extended to communities who have never had much access to these services if any access at all.
- BACKGROUND. FQHCs and RHCs serve a significant portion of the uninsured and underinsured in California. They are open-door providers that treat patients on a sliding scale fee structure and make their services available regardless of a patient's ability to pay. There are approximately 600 FQHCs and 350 RHCs in California. All FQHCs, and a majority of the RHCs, are either non-profit community clinics or government entities. Because these clinics are safety net providers, their continued survival depends heavily on the stability and adequacy of revenues from the Medi-Cal program.
FQHCs and RHCs are paid by Medi-Cal on a "per visit" basis in an amount equal to the clinic's cost of delivering services. Essentially, DHCS calculates the annual cost of care provided by each clinic and divides the total by the number of visits to determine a per visit rate. A “visit” requires a face-to-face encounter between a FQHC or RHC patient and specified health care providers. Reimbursement to FQHCs and RHCs is governed by both state and federal law. For Medi-Cal managed care plan patients, DHCS reimburses FQHCs and RHCs for the difference between its per-visit PPS rate and the payment made by the plan. This payment is known as a “wrap around” payment.- Change in scope of services. This bill would expand the definition of a change in service scope relating to operating costs attributable to capital expenditures to include the adoption, implementation, or upgrade of a certified electronic health system. Under existing law, a FQHC or rural health center may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by a FQHC or RHC. A change in scope of services includes any of the following:
- The addition of a new FQHC/RHC service that is not incorporated in the baseline PPS rate, or a deletion of an FQHC/RHC service that is incorporated in the baseline rate;
- A change in service due to amended regulatory requirements or rules;
- A change in service resulting from relocating or remodeling an FQHC or RHC;
- A change in types of services due to a change in applicable technology and medical practice utilized by the center or clinic;
- 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;
- Any changes in any of the services, as specified, or in the provider mix of an FQHC or RHC or one of it’s sites;
- Changes in operating costs attributable to capital expenditures associated with a modification of the scope of any of the services, as specified, including new or expanded service facilities, regulatory compliance, or changes in technology or medical practices at the center or clinic;
- Indirect medical education adjustments and a direct graduate medical education payment that reflects the costs of providing teaching services to interns and residents; and,
- Any changes in the scope of a project approved by the federal Health Resources and Service Administration.
- State Plan Amendment (SPA) 18-003. Medicaid is a joint federal and state program and when states plan to make changes to program policies or operational approaches, states send a SPA to the Centers for Medicare and Medicaid Services for review and approval. States also submit SPAs to request permissible program changes, make corrections, or update a Medicaid state plan with new information. Currently, SPA 18-003 is pending at DHCS and is proposing changes to the reimbursement policies for FQHCs and RHCs, and adds marriage and family therapists as a new FQHC/RHC billable provider. One of the provisions in this SPA is a limitation on a change in scope on electronic health records. The pending SPA states that once the cost of any electronic medical records and electronic dental records are included in an FQHC’s or RHC’s per visit rate, the FQHC or RHC may not apply for an adjustment to its per-visit rate solely due to a subsequent acquisition and implementation of any electronic medical and dental records. This bill appears inconsistent with the pending SPA.
- 340(B) Program. As a part of the Governor’s 2018‑19 budget, the administration has proposed changes in statute that would, conditioned on federal approval, prohibit the dispensing of 340B prescription drugs to Medi‑Cal enrollees. Covered entities would remain free to utilize the 340B Program for their non‑Medi‑Cal patients.
The 340B Program, established in 1992, requires drug manufacturers to provide discounts on the outpatient prescription drugs they sell to certain eligible healthcare providers, referred to as “covered entities.” There are various criteria that healthcare providers may meet in order to be designated as covered entities that are eligible for the 340B Program. Major healthcare provider types that are generally eligible to participate in the program include certain hospitals that serve large numbers of low‑income patients (including both the uninsured and Medicaid enrollees); certain rural hospitals; community health clinics, such as FQHCs; and, others.
Under federal law, covered entities may dispense or arrange for the dispensing of 340B prescription drugs to their own patients, regardless of who ultimately pays for the prescription drugs. As such, the 340B discounts apply regardless of whether the covered entity is ultimately reimbursed for the dispensed prescription drugs by Medicaid, Medicare, commercial health insurance, or the patient.
According to the Legislative Analyst’s Office, the 340B Program generally requires covered entities to receive prescription drug discounts that reduce the prices paid by a covered entity to at least the lower of: i) the best price offered to most public and private entities; or, i) the average manufacturer sales prices minus a percentage of between 13% and 23.1% (depending on the type of prescription drug).
In 2015 (the most recent year for which the information is available), covered entities are estimated to have saved around $6 billion on prescription drugs through the 340B Program. Net of the 340B discounts, covered entities are estimated to have spent over $12 billion on 340B prescription drugs in 2015.
- Change in scope of services. This bill would expand the definition of a change in service scope relating to operating costs attributable to capital expenditures to include the adoption, implementation, or upgrade of a certified electronic health system. Under existing law, a FQHC or rural health center may apply for an adjustment to its per-visit rate based on a change in the scope of services provided by a FQHC or RHC. A change in scope of services includes any of the following:
Savings under the 340B Program result from the lower relative cost of 340B prescription drugs compared to non‑340B drugs. Ultimately, savings resulting from the 340B Program are likely shared by multiple participants in the healthcare system rather than entirely retained by covered entities themselves. Covered entities retain 340B savings by charging external payers of 340B prescription drugs—such as health insurers—prices that are higher than the 340B prices at which they acquired the drugs. The 340B Program does not place restrictions on how covered entities may use any retained savings. To the extent covered entities charge external payers lower prices for prescription drugs than they would have if the drugs had been purchased without the 340B discounts, then these external payers benefit from the 340B discounts as well.
The Legislative Analyst’s Office further points out that federal approval of the Governor’s proposal is required since Medi‑Cal is overseen by both the state and federal governments. In the event that the federal government declines to approve the full elimination of the use of the 340B Program in Medi‑Cal, the proposed changes in statute would authorize DHCS to alternatively seek federal approval to: i) prohibit or limit the use of contract pharmacies in Medi‑Cal; and/or, ii) prohibit or limit certain types of covered entities from dispensing certain or all 340B prescription drugs to Medi‑Cal enrollees. (The proposal does not specify which types of covered entities could be prohibited or limited from using the 340B Program in Medi‑Cal or which prescription drugs could be targeted for exclusion.) Changes to the allowable use of the 340B Program under the Governor’s proposal would take place following federal approval but no sooner than January 1, 2019.
- RELATED LEGISLATION.
- AB 2428 (Gonzalez Fletcher) allows an FQHC or RHC that adds a physical plant to its primary care license to elect to have the reimbursement rate for each of the plant or plants pursuant to one of two existing reimbursement methods: cost-based or three comparable clinic method. AB 2428 is pending in Assembly Appropriations Committee.
- AB 2576 (Aguiar-Curry) expands the types of services that are reimbursable when provided by a community clinic during a state of emergency and federal approval is obtained. Requires the Board of Pharmacy to immediately issue a temporary pharmacy or clinic permit to specified clinics during as state of emergency. AB 2576 is pending in Assembly Business and Professions Committee.
- PREVIOUS LEGISLATION.
- SB 323 (Mitchell), Chapter 540, Statutes of 2017, authorizes FQHCs and RHCs to receive reimbursement from county specialty mental health plans and through Drug Medi-Cal outside of the regular Medi-Cal reimbursement structure that applies to FQHCs and RHCs.
- AB 1863 (Wood), Chapter 610, Statutes of 2016, adds marriage and family therapists to the list of healthcare professionals that qualify for a face-to-face encounter with a patient at FQHCs or RHCs for purposes of a per-visit Medi-Cal payment under PPS.
- SB 610 (Pan) of 2016 would have established timeframes for DHCS to review an FQHC and RHC Medi-Cal-related scope-of-service changes and reconciliation changes, and would have required DHCS to make payments within specified timeframes if reconciliation payments are owed. SB 610 was one of the six bills vetoed by Governor because “these bills would require new spending at a time when there is considerable uncertainty in the funding of this [Medi-Cal] program. Until the fiscal outlook for Medi-Cal is stabilized, I cannot support any of these measures.”
- POLICY COMMENTS. As stated above, the Governor has a pending budget request to prohibit the dispensing of 340B prescription drugs to Medi‑Cal enrollees. This bill contradicts this budget proposal at least for purposes of FQHCs. Additionally, the 340B Program discussion is broader that the provisions of this bill and because it is part of the Governor’s proposal, it is more appropriately addressed through the budget process. The Committee may wish to remove the 340B Program provisions in this bill.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097
Discussed in Hearing
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Bill Author
Bill Co-Author(s):