Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis. Visit is defined as a face-to-face encounter between a patient of an FQHC or RHC and specified health care professionals. Existing law requires a managed care entity to offer subcontracts to FQHCs and RHCs in the relevant service area, as a condition of obtaining a contract with the department.

This bill would authorize an a willing and qualified FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient. patient and to receive reimbursement from the public or private entity for the services rendered under the agreement. The bill would prohibit the department from recouping payment authorized under this agreement from the FQHC or RHC, as specified. The bill would describe those entities eligible to contract with an FQHC or RHC under the bill, and would define services that follow the patient as services that are not reimbursable on a per-visit basis pursuant to a specified provision, that promote continuity of care and contribute to overall patient wellness, as specified. The bill would specify that compensation paid to a federally qualified health center or rural health clinic pursuant to the agreement would be supplemental to, and separate from, the federally qualified health centers or rural health clinics prospective payment rate, and not subject to reconciliation or reduction, as specified. The bill would prohibit an FQHC or RHC that bills an entity for services that follow the patient from seeking reimbursement or attempting to obtain payment for a service billed pursuant to the specified per-visit billing provision, but would not preclude the FQHC or RHC from billing a visit under that provision and a service provided pursuant to the bill on the same day. The bill would make legislative findings and declarations related to this measure.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program, to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis. Visit is defined as a face-to-face encounter between a patient of an FQHC or RHC and specified health care professionals. Existing law requires a managed care entity to offer subcontracts to FQHCs and RHCs in the relevant service area, as a condition of obtaining a contract with the department.

This bill would authorize an FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient. The bill would describe those entities eligible to contract with an FQHC or RHC under the bill, and would define services that follow the patient as services that are not reimbursable on a per-visit basis pursuant to a specified provision, that promote continuity of care and contribute to overall patient wellness, as specified. The bill would specify that compensation paid to a federally qualified health center or rural health clinic pursuant to the agreement would be supplemental to, and separate from, the federally qualified health centers or rural health clinics prospective payment rate, and not subject to reconciliation or reduction, as specified. The bill would prohibit an FQHC or RHC that bills an entity for services that follow the patient from seeking reimbursement or attempting to obtain payment for a service billed pursuant to the specified per-visit billing provision, but would not preclude the FQHC or RHC from billing a visit under that provision and a service provided pursuant to the bill on the same day.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program. program, to be reimbursed, to the extent that federal financial participation is obtained, to providers on a per-visit basis. Visit is defined as a face-to-face encounter between a patient of an FQHC or RHC and specified health care professionals. Existing law requires a managed care entity to offer subcontracts to FQHCs and RHCs in the relevant service area, as a condition of obtaining a contract with the department.

This bill would authorize a federally qualified health center or rural health clinic an FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient. The bill would describe those entities eligible to contract with an FQHC or RHC under the bill, and would define services that follow the patient as services that are not reimbursable on a per-visit basis pursuant to a specified provision, that promote continuity of care and contribute to overall patient wellness, as specified. The bill would specify that compensation paid to a federally qualified health center or rural health clinic pursuant to the agreement would be supplemental to, and separate from, the federally qualified health centers or rural health clinics prospective payment rate, and not subject to reconciliation or reduction, as specified. The bill would prohibit an FQHC or RHC that bills an entity for services that follow the patient from seeking reimbursement or attempting to obtain payment for a service billed pursuant to the specified per-visit billing provision, but would not preclude the FQHC or RHC from billing a visit under that provision and a service provided pursuant to the bill on the same day.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program. Existing law requires a managed care entity to offer subcontracts to FQHCs and RHCs in the relevant service area, as a condition of obtaining a contract with the department.

This bill would authorize a federally qualified health center or rural health clinic contracting with a managed care entity to enter into a separate, additional agreement for the provision of to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient. The bill would describe those entities eligible to contract with an FQHC or RHC under the bill, and would define services that follow the patient as services that promote continuity of care and contribute to overall patient wellness, as specified. The bill would specify that compensation paid to a federally qualified health center or rural health clinic pursuant to the agreement would be supplemental to, and separate from, the federally qualified health centers or rural health clinics prospective payment rate, and not subject to reconciliation or reduction, as specified.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides that federally qualified health center (FQHC) services and rural health clinic (RHC) services, as defined, are covered benefits under the Medi-Cal program. Existing law requires a managed care entity to offer subcontracts to FQHCs and RHCs in the relevant service area, as a condition of obtaining a contract with the department.

This bill would authorize a federally qualified health center or rural health clinic contracting with a managed care entity to enter into a separate, additional agreement for the provision of services that follow the patient. The bill would define services that follow the patient as services that promote continuity of care and contribute to overall patient wellness, as specified. The bill would specify that compensation paid to a federally qualified health center or rural health clinic pursuant to the agreement would be supplemental to, and separate from, the federally qualified health centers or rural health clinics prospective payment rate, and not subject to reconciliation or reduction, as specified.

SENATE THIRD READING

STR Bill Id:

Author:(Pan)

As Amended Ver:August 20, 2018

Majority vote

SENATE VOTE: 40-0

SUMMARY: Allows a willing and qualified federally qualified health center (FQHC) or rural health clinic (RHC) to enter into an agreement with a public or private entity, including a health plan, a county, a health care district, a community-based organization or an individual health care or social services provider, to provide services that follow the patient, as described. Specifically, this bill:

1. Authorizes a willing and qualified FQHC or RHC to enter into an agreement with a public or private entity to provide services that follow the patient, as defined below. Authorizes and FQHC and RHC to receive reimbursement from the public or private entity for these services rendered under the agreement.
2. Prohibits the Department of Health Care Services (DHCS), to the extent authorized under federal law, from recouping payment issued under the agreement from the FQHC or RHC.
3. Provides that a public or private entity eligible to contract with a FQHC or RHC includes, but not be limited, to any of the following:
   1. A managed care health plan;
   2. A county;
   3. A health care district;
   4. A community-based organization; or,
   5. An individual health care or social services provider whose activities comply with the individual's scope of practice or certification.
4. Defines services that follow the patient as services that are not reimbursable that promote continuity of care and contribute to overall patient wellness. Specifies that these services include an array of services provided to eligible Medi-Cal beneficiaries under the following programs:
   1. The Medi-Cal 2020 Waiver Whole Person Care pilot program, as specified;
   2. The Diabetes Prevention Program, as specified;
   3. The California Medication Assisted Treatment Expansion Project;
   4. The Chronic Care Management program, which was established by the Centers for Medicare and Medicaid Services; and,
   5. Any other programs that provide services to Medi-Cal enrollees that are otherwise non-reimbursable under the Medi-Cal programs, and are approved by DHCS.
5. Requires that compensation paid to an FQHC or RHC pursuant to an agreement under this bill is supplemental to, and separate from, the FQHC's or RHC's prospective payment rate and not subject to reconciliation or any reduction.
6. Prohibits an FQHC or RHC that bills an entity for the services that follow the patient from seeking reimbursement or attempting to obtain payment from DHCS or an entity for a service billed pursuant to existing prospective payment rate system (PPS) provisions.
7. Provides that this bill does not preclude a clinic from billing a visit under existing PPS provisions and a service that follows a patient on the same day.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. The fiscal impact of this bill is unknown but could be significant, primarily because of provisions excluding contractual payments from a reconciliation process. Currently, clinics are required to submit an Annual Reconciliation Request to DHCS.
2. One-time costs to DHCS, potentially in the range of $100,000, to seek federal approval to implement the bill. Assuming the proposed contractual arrangements are federally allowable, DHCS would incur additional ongoing administrative costs, potentially in the range of $100,000 or greater, depending upon the extensiveness of audit activities to ensure compensation is appropriately excluded from reconciliation (General Fund (GF)/federal funds).
3. This bill also allows clinics to bill for services through PPS and through the proposed contractual arrangements on the same day. Current law limits the ability of clinics to receive compensation to one PPS-reimbursable visit per day. This bill could increase Medi-Cal utilization and overall costs by incentivizing the provision of more billable services (GF/federal).

COMMENTS: According to the author, the patient centered medical home (PCMH) is a health care delivery system model in which health care providers work in partnership with one another, their patients, and their patients' families to coordinate care and ensure that patients receive the right care at the right time. Many FQHCs have incorporated PCMH or health home services into their practice – such as care coordination, health promotion, referrals to community and social supports, and individual/family support services. It is clear, however, that the FQHC scope of services and the FQHC PPS rates do not include the kind of comprehensive care management services contemplated under the health homes program demonstration. This has been demonstrated through FQHC payment policy for care management adopted by the federal Centers for Medicare and Medicaid Services and by the federal health home rules adopted by other states. This bill is designed to fix the payment system so we can continue to use health homes as a way of delivering primary care that helps people stay healthy by managing chronic conditions and keeping up with preventive care.

Section 2703 of the federal Patient Protection and Affordable Care Act (ACA) allowed states to create Medicaid health homes to coordinate the full range of physical health services, behavioral health services, and community-based long-term services and supports needed by members with chronic conditions. Enhanced federal matching funds of 90% are available for two years, and, if a health home program (HHP) is implemented in California, The California Endowment has offered to fund the remaining 10% of funds (up to $25 million per year) required for these additional services for that same two-year period.

AB 361 (Mitchell), Chapter 642, Statutes of 2013, authorizes DHCS, subject to federal approval, to create an ACA Section 2703 HHP for members with chronic conditions. AB 361 provides that the HHP will be implemented only if federal financial participation is available and the program is cost neutral regarding State General Funds. It also requires DHCS to ensure that an evaluation of the program is completed and a report is submitted to the appropriate policy and fiscal committees of the Legislature within two years after implementation of the program.

According to the Agency for Healthcare Research and Quality, a medical home is an approach to the delivery of primary care that is:

1. Patient-centered: a partnership among practitioners, patients, and their families ensures that decisions respect patients' wants, needs, and preferences, and that patients have the education and support they need to make decisions and participate in their own care;
2. Comprehensive: a team of care providers is wholly accountable for a patient's physical and mental health care needs, including prevention and wellness, acute care, and chronic care
3. Coordinated: care is organized across all elements of the broader health care system, including specialty care, hospitals, home health care, community services and supports;
4. Accessible: patients are able to access services with shorter waiting times, "after hours" care, 24/7 electronic or telephone access, and strong communication through health IT innovations; and,
5. Committed to quality and safety: clinicians and staff enhance quality improvement to ensure that patients and families make informed decisions about their health.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0004189

Date of Hearing: July 19, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 456

Author:(Pan) – As Amended Ver:June 19, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows federally qualified health centers (FQHCs) or rural health clinics (collectively, clinics) to enter contractual agreements to provide services on behalf of Medi-Cal beneficiaries outside of the clinic's normal Medi-Cal reimbursement structure. Specifically, this bill:

1. Allows clinics to enter agreements with public and private entities to provide "services that follow the patient," which are defined as services not reimbursable through the Medi-Cal prospective payment system (PPS) structure, which promote continuity of care and contribute to overall wellness.
2. Includes a list of entities eligible to contract with clinics, and a list of eligible "services that follow the patient," but provides that these lists are not exhaustive.
3. Makes compensation paid to a clinic pursuant to (1) supplemental to, and separate from, the PPS rate. Provides such compensation is not subject to any reduction, and excludes it from a reconciliation process that would otherwise reduce state reimbursement to clinics in the amount of the compensation.
4. Prohibits a clinic that receives compensation pursuant to (1) from billing for the same service through PPS, but does not prohibit a clinic to be reimbursed for services pursuant to (1) and via to the PPS rate on the same day.

FISCAL EFFECT:

1. The fiscal impact of this bill is unknown but could be significant, primarily because of provisions excluding contractual payments from a reconciliation process. Currently, clinics are required to submit an Annual Reconciliation Request to the Department of Health Care Services (DHCS). This bill exempts these services from reconciliation or any reduction. As explained further in the comments below, reconciliation is a process by which clinics receive additional funding from the state—funding that ensures they are reimbursed for the number of Medi-Cal visits at their clinic-specific PPS rate. Reconciliation compares what the clinics are owed (number of Medi-Cal visits times PPS rate) with compensation received from managed care plans. The state then pays each clinic the difference.

A simple example helps to illustrate the potential fiscal dynamic. Consider a clinic with a PPS rate of $100 per Medi-Cal visit. Under current practice, the clinic receives $80 for a visit from a managed care plan, and the state then pays the clinic a "wrap-around" payment of $20 to ensure the clinic is paid at $100. If under this bill, plans slightly increase payments to improve care coordination, and some of those payments are defined as "services that follow the person," that portion of plan payments would no longer be counted toward the clinic's compensation for purposes of the PPS rate, nor subject to reconciliation. For instance, consider if the same plan contracted for a visit at $70, but also separately contracted for "services that follow the person" at the equivalent of $15 per visit. In this example, only the $70 would be counted for purposes of reconciliation, which would result in the state paying a wrap-around payment of $30, instead of $20 in the prior example. The clinic would financially benefit, receiving $115 instead of $100. It is envisioned by the author that the higher sum would reflect the provision of some additional level of services.

Essentially, the fiscal concern is that some services currently counted in the PPS rate would be carved out of the payment that is subject to reconciliation, leaving the state on the hook for a larger sum. Approximately $600 million per year in Medi-Cal managed care plan revenues are counted in the annual reconciliation requests for clinics, reducing what the state owes clinics by that amount. If a significant portion of this compensation could be considered “services that follow the patient” and therefore not subject to reconciliation, the bill could result in unknown, significant costs, potentially in the tens of millions of dollars (GF/federal).

1. One-time costs to DHCS, potentially in the range of $100,000, to seek federal approval to implement the bill. Assuming the proposed contractual arrangements are federally allowable, DHCS would incur additional ongoing administrative costs, potentially in the range of $100,000 or greater, depending upon the extensiveness of audit activities to ensure compensation is appropriately excluded from reconciliation (GF/federal).
2. This bill also allows clinics to bill for services through PPS and through the proposed contractual arrangements on the same day. Current law limits the ability of clinics to receive compensation to one PPS-reimbursable visit per day. This bill could increase Medi-Cal utilization and overall costs by incentivizing the provision of more billable services (GF/federal).

COMMENTS:

1. Purpose. According to the author, this bill is necessary to allow clinics to more fully participate in innovative and emerging opportunities to provide comprehensive care management for high-needs Medi-Cal beneficiaries. Counties and health plans will be looking to partner with providers to offer such services. Currently, clinics are limited in their ability to contract to provide additional services for Medi-Cal beneficiaries, because any compensation received for these services is "zeroed out" by the required reconciliation process with the state. This bill allows clinics to contract for the aforementioned services without fear that these contractual arrangements would be rendered meaningless by the reconciliation process. It instead lets clinics keep the compensation by defining a set of "services that follow the person" that can be provided outside of the clinic's normal reimbursement PPS structure and reconciliation process.

This bill is modeled after a pending State Plan Amendment (SPA) for a program called "Health Homes," which, among other things, allows managed care plans to contract with clinics for care management and other services on behalf of high-needs patients, and required the services to be compensated separately from, and in addition to, the PPS rate received by a clinic. The additional payment is deemed supplemental and not subject to reconciliation or to any other reduction.

1. Clinic Reimbursement. Because of their unique role in providing health care to underserved communities and the uninsured, policymakers have historically attempted to ensure that community clinics remain financially viable. Federal law requires federally funded health programs, including Medicaid and Children's Health Insurance Program (CHIP), to pay clinics using a special reimbursement structure commonly called a prospective payment system (PPS). According to DHCS Form 3090, the Freestanding FQHC Cost Report Form, PPS rates are a clinic-specific per-visit rate, and are calculated by dividing costs for Medi-Cal-reimbursable services by Medi-Cal reimbursable visits. PPS rates are also adjusted by a growth rate to account for inflation. In addition, clinics can request a recalculation of their PPS rates based on a change in their scope of services. If clinics are paid by managed care plans in amounts less than their PPS rates, there is a reconciliation performed to ensure clinics get paid the full PPS rate through a wrap-around payment paid by DCHS. For Medi-Cal, current PPS rates vary from around $80 to over $650 per visit, depending on the mix of services provided at each clinic.
2. Costs for Some "Services That Follow the Patient" Are Reflected in Base PPS Rate. Under current state law, an FQHC or RHC “visit” means a face-to-face encounter between a patient and certain type of health care provider defined in state law. A visit must be documented in order for a clinic to be reimbursed.

All clinics must provide at least a defined scope of primary care and mental health services. In addition, a clinic must provide certain services, including case management, health education, outreach, transportation, and translation. Additional services may be provided. As relevant to this bill, these additional allowable services include enabling/supportive services that support patient access to non-medical, social, educational or other related services. The clinics' cost of providing both the required services and the additional allowable services are included in the PPS rate development, which means clinics are indirectly compensated for providing these services every time a visit is billed.

For example, a patient could visit a clinic to receive a medical check-up and receive other services that are not separately billable.   If a patient visited for a non-billable visit, such as for health education, there would be no separate compensation to the clinic, but the cost of these "non-billable but allowable services" are reflected in the baseline PPS cost-based rate as long as they are within the approved clinic scope of service. The rationale is that due to the way the PPS rate is constructed, the billable visits result in sufficient compensation for the clinic to cover all services the clinic delivers.  

1. Related Legislation. SB 323 (Mitchell), also being heard today, allows clinics to contract with counties to provide Drug Medi-Cal and specialty mental health services outside of the PPS reimbursement structure.

1. Prior Legislation. SB 147 (Hernández), Chapter 760, Statutes of 2014, requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an alternative payment methodology (APM) authorized under federal Medicaid law.

SB 361 (Mitchell) Chapter 642, Statutes of 2013, authorized DHCS to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions.

1. Support. Clinics support this bill, stating it allows them to be reimbursed for non-face-to-face activities that are required to provide comprehensive, coordinated care management for high-needs beneficiaries with complex conditions.
2. Opposition. Department of Finance (DOF) opposes this bill, citing GF risk from higher wrap-around payments. DOF explains excluding services from reconciliation may result in overpayment. DOF is also concerned that the bill is not contingent on federal approval, stating that it puts the GF at risk if the federal government does not approve a state plan amendment for these services. Finally, DOF suggests it is prudent to wait for implementation of ongoing PPS payment reform efforts before implementing new supplemental payment programs.
3. Staff Comments. Allowing additional supplemental payments for clinic services, and excluding such payments from reconciliation, runs the risk of double-paying clinics. This bill was amended on April 26, 2017 to address concerns about duplicative billing. Specifically, it restricts “services that follow the patient” to services that are not reimbursable pursuant to the PPS rate. However, for several reasons it is unclear whether this language is restrictive enough to protect the state from double-paying clinics. First, the language is internally contradictory, since some of the services proposed as "services that follow the patient," such as care coordination, are already required to be provided by clinics, and as such should already be reflected in a clinic's PPS rate. As explained above, a PPS rate can also include a large number of ancillary services that are similar to "services that follow the patient" as envisioned in this bill. These services are PPS-reimbursable, even though in some cases they may not be separately billable. Second, the services are ill-defined (e.g., what does "care coordination" actually mean?) and the list of services is open-ended, posing challenges to auditors who must ensure these services are different from and above what is currently being provided. Third, clinics differ in the types of services and robustness of services that are reflected in their clinic-specific PPS rate. What is "supplemental" for one clinic may already be baked into another clinic's PPS rate, making it difficult for DHCS to identify which services are appropriately exempted from reconciliation for a specific clinic.

Finally, it is unclear whether the federal government would approve excluding certain payments from reconciliation. The bill does not make implementation conditional on federal approval, which puts the GF at risk as discussed in DOF's opposition.

On the other hand, there are likely many opportunities whereby clinics could provide enhanced services, which are legitimately separate from and above the services currently being provided, the provision of which would be beneficial to plans, clinics, and patients.

Ongoing fiscal concerns would be alleviated by (a) making implementation contingent on federal approval and financial participation, and (b) ensuring that "services that follow the patient" are clearly defined in such a way as to be completely separate from and in addition to services provided pursuant to the PPS rate. It is inherently difficult to do this in a fiscally prudent way that accommodates a variety of potential services, as this bill attempts to do. That each clinic likely provides a different baseline level of such services further complicates the matter.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: June 13, 2017

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

SBPCA Bill Id:SB 456

Author:(Pan) – As Amended Ver:April 26, 2017

SENATE VOTE: 40-0

SUBJECT: Medi-Cal managed care: federally qualified health centers and rural health clinics: services that follow the patient.

SUMMARY: Allows a federally qualified health center (FQHC) or rural health clinic (RHC) to enter into an agreement with a public or private entity, including a health plan, a county, a health care district, a community-based organization or an individual health care or social services provider, to provide services that follow the patient, as described. Specifically, this bill:

1. Authorizes a FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient, as defined below.
2. Provides that a public or private entity eligible to contract with a FQHC or RHC includes, but not be limited, to any of the following:
   1. A managed care health plan;
   2. A county;
   3. A health care district;
   4. A community-based organization; or,
   5. An individual health care or social services provider whose activities comply with the individual’s scope of practice or certification.
      
3. Defines services that follow the patient as services that are not reimbursable that promote continuity of care and contribute to overall patient wellness. Specifies that these services include, but are not limited to, all of the following:
   1. Comprehensive care management;
   2. Care coordination;
   3. Health and wellness initiatives;
   4. Comprehensive transitional care;
   5. Individual and family support services; and,
   6. Referral to community and social supports.
      
4. Requires that compensation paid to an FQHC or RHC pursuant to an agreement under this bill is supplemental to, and separate from, the FQHC’s or RHC’s prospective payment rate and not subject to reconciliation or any reduction.
5. Prohibits an FQHC or RHC that bills an entity for the services that follow the patient from seeking reimbursement or attempting to obtain payment from the Department of Health Care Services (DHCS) or an entity for a service billed pursuant to existing prospective payment rate system (PPS) provisions.
6. Provides that this bill does not preclude a clinic from billing a visit under existing PPS provisions and a service that follows a patient on the same day.
   

EXISTING LAW:

1. Establishes the federal Patient Protection and Affordable Care Act (ACA), which among other provisions, authorized states to apply for demonstration projects for health home services for Medicaid beneficiaries with chronic conditions.
2. Establishes the Medi-Cal program as California’s Medicaid program, administered by DHCS, which provides comprehensive health care coverage for low-income individuals. Provides that FQHC and RHC services are covered benefits under the Medi-Cal program.
3. Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between a FQHC or RHC patient and specified health care providers. Refers to the Medi-Cal reimbursement to FQHCs and RHCs on a per-visit rate as PPS.
4. Authorizes an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by a FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles, as set forth in federal regulation.
5. 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.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. One-time costs, likely in the low hundreds of thousands, for revising regulations and seeking any necessary federal approvals to allow the payment procedures authorized under this bill (General Fund and federal funds).
2. No significant increase in Medi-Cal spending is anticipated for services that this bill would authorize clinics to perform under contract. This bill specifically provides that any services performed by a clinic pursuant to this bill must be separate from a clinic’s prospective payment rate and that such clinics may not bill the Medi-Cal program using the prospective payment system for any services provided under this bill. These constraints in this bill will prohibit participating clinics from providing services under contract that they are already paid to provide. While this bill would allow clinics to participate in Medi-Cal programs, such as the Whole Person Care Pilots, participation by clinics will not increase the overall provision of Medi-Cal services. Rather, this will simply allow clinics to be one of the potential providers of services in those programs.
3. Unknown potential costs for additional Medi-Cal services provided by clinics, due to the ability to provide existing Medi-Cal services and newly authorized services on the same day. Under current law, FQHCs and RHCs are prohibited from billing Medi-Cal for two face-to-face visits on the same day. This requirement was put into place to limit Medi-Cal spending, by requiring patients to come to a clinic on separate days to receive billable face-to-face services. This bill authorizes a clinic to provide both a billable face-to-face visit and provide additional services authorized in this bill on the same day. In theory, the ability to provide multiple services on the same day may increase utilization of Medi-Cal services, due to the convenience for patients of receiving services during one visit to a clinic. Whether this would significantly increase overall Medi-Cal spending is unknown.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, the patient centered medical home (PCMH) is a health care delivery system model in which health care providers work in partnership with one another, their patients, and their patients' families to coordinate care and ensure that patients receive the right care at the right time. Many FQHCs have incorporated PCMH or health home services into their practice – such as care coordination, health promotion, referrals to community and social supports, and individual/family support services. It is clear, however, that the FQHC scope of services and the FQHC PPS rates do not include the kind of comprehensive care management services contemplated under the health homes program demonstration. This has been demonstrated through FQHC payment policy for care management adopted by the federal Centers for Medicare and Medicaid Services and by the federal health home rules adopted by other states. This bill is designed to fix the payment system so we can continue to use health homes as a way of delivering primary care that helps people stay healthy by managing chronic conditions and keeping up with preventive care.
2. BACKGROUND.
   1. FQHCs and RHCs. FQHCs and RHCs serve a significant portion of the uninsured and underinsured in California. They are open-door providers that treat patients on a sliding scale fee structure and make their services available regardless of a patient's ability to pay. There are approximately 600 FQHCs and 350 RHCs in California. All FQHCs, and a majority of the RHCs, are either non-profit community clinics or government entities. Because clinics are safety net providers, their continued survival depends heavily on the stability and adequacy of revenues from the Medi-Cal program. FQHCs and RHCs are paid by Medi-Cal on a "per visit" basis in an amount equal to the clinic's cost of delivering services. Essentially, DHCS calculates the annual cost of care provided by each clinic and divides the total by the number of visits to determine a per visit rate.
      
      Community clinics and health centers provide health care to 14% of Californians. This figure is even higher in rural or remote areas that struggle to attract and retain health care providers. Mental health and substance abuse services are part of the essential health care benefits under the ACA. As such, they are a part of Medi-Cal. Along with the expansion of these benefits, the expansion of the Medi-Cal program overall has increased the number of beneficiaries to over 14 million, placing even greater demands on Medi-Cal providers.
      
      Reimbursement to FQHCs and RHCs is governed by state and federal law. FQHCs and RHCs are reimbursed by Medi-Cal on a per-visit rate which is known as the PPS. For Medi-Cal managed care plan patients, DHCS reimburses FQHCs and RHCs for the difference between its per-visit PPS rate and the payment made by the plan. This payment is known as a “wrap around” payment.
   2. Health Homes/PCMH. Section 2703 of the ACA allowed states to create Medicaid health homes to coordinate the full range of physical health services, behavioral health services, and community-based long-term services and supports needed by members with chronic conditions. Enhanced federal matching funds of 90% are available for two years, and, if a health home program (HHP) is implemented in California, The California Endowment has offered to fund the remaining 10% of funds (up to $25 million per year) required for these additional services for that same two-year period.

AB 361 (Mitchell), Chapter 642, Statutes of 2013, authorizes DHCS, subject to federal approval, to create an ACA Section 2703 HHP for members with chronic conditions. AB 361 provides that the HHP will be implemented only if federal financial participation is available and the program is cost neutral regarding State General Funds. It also requires DHCS to ensure that an evaluation of the program is completed and a report is submitted to the appropriate policy and fiscal committees of the Legislature within two years after implementation of the program.

According to the Agency for Healthcare Research and Quality, a medical home is an approach to the delivery of primary care that is:

• • 1. Patient-centered: a partnership among practitioners, patients, and their families ensures that decisions respect patients’ wants, needs, and preferences, and that patients have the education and support they need to make decisions and participate in their own care;
    2. Comprehensive:  a team of care providers is wholly accountable for a patient’s physical and mental health care needs, including prevention and wellness, acute care, and chronic care;
    3. Coordinated:  care is organized across all elements of the broader health care system, including specialty care, hospitals, home health care, community services and supports;
    4. Accessible:  patients are able to access services with shorter waiting times, "after hours" care, 24/7 electronic or telephone access, and strong communication through health IT innovations; and,
    5. Committed to quality and safety:  clinicians and staff enhance quality improvement to ensure that patients and families make informed decisions about their health.

1. SUPPORT. CaliforniaHealth+ Advocates, which represents California’s 1,150 not-for-profit community clinics and health centers, is the sponsor of this bill and states that FQHC PPS rate does not reimburse FQHCs for the non-face-to-face activities required to provide comprehensive, coordinated care management for high-needs beneficiaries with complex conditions. This bill will improve the health of California’s most vulnerable people by allowing FQHCs to be directly reimbursed for services that promote continuity of care and wellness in ways not covered by PPS. Without this bill, FQHCs and RHCs will be dis-incentivized and potentially prohibited from participating in innovative pilot projects and demonstration projects that are designed to improve health by addressing social determinants of health, continuity of care, and wellness. These projects include the Medi-Cal 2020 Section 1115 Waiver Whole Person Care pilots, the Medicare Chronic Care Management program, or county and managed care organization-based case management programs. Furthermore, it states that this bill will reduce overall cost to the healthcare system through better care coordination, addressing social determinants of health, and incentivizing wellness services that keep patients healthy and out of the emergency room.
2. PREVIOUS LEGISLATION. SB 147 (Hernández), Chapter 760, Statutes of 2014, requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an alternative payment methodology (APM) authorized under federal Medicaid law. SB 147 requires an FQHC participating in the pilot to receive a per member per month payment for each of its APM enrollees from a Medi-Cal managed care health plan, instead of the wrap around payment FQHCs currently receive from DHCS.
3. TECHNICAL AMENDMENT. On page 3, line 17, delete “clinic” and replace with “federally qualified health center or rural health clinic.”

REGISTERED SUPPORT / OPPOSITION:

Support

California Health+ Advocates (sponsor)

Alameda Health Consortium

Alliance for Rural Community Health

APLA Health

Asian Pacific Health Care Venture, Inc.

Borrego Community Health Foundation

Borrego Health

California Retired Teachers Association

California School-Based Health Alliance

Capitol Health Network

Central Valley Health Network

Clinicas de Salud del Pueblo

Coalition of Orange County Community Health Centers

Coastal Health Alliance

Community Clinic Association of Los Angeles County

Community Clinic Consortium

Community Health Partnership

Community Health Systems, Inc.

East Valley Community Health Center

Eisner Health

El Proyecto del Barrio, Inc.

Harbor Community Clinic

Health Alliance of Northern California

Health Center Partners of Southern California

Hill Country Community Clinic

Imperial Beach Community Clinic

Indian Health Center of Santa Clara Valley

Indian Health Council, Inc.

La Maestra Health Centers

LifeLong Medical Care

Marin Community Clinics

Mountain Health & Community Services

National Association of Social Workers – California Chapter

Neighborhood Healthcare

North County Health Services

North East Medical Services

Northeast Valley Health Corporation

OLE Health

Omni Family Health

Open Door Community Health Centers

Operation Samahan

Peach Tree Health

Planned Parenthood of the Pacific Southwest

Redwood Community Health Coalition

Redwoods Rural Health Center

Ritter Center

Sacramento Native American Health Center, Inc.

San Diego American Indian Health Center

San Diego Family Care

San Fernando Community Health Center

San Francisco Community Clinic Consortium

San Ysidro Health Center

Santa Rosa Community Health Centers

Shasta Community Health Center

Southern Indian Council

St. John’s Well Child & Family Center

St. Jude Neighborhood Health Centers

Sycuan Medical Dental Care

Tiburcio Vásquez Health Center, Inc.

Venice Family Clinic

Vista Community Clinic

Opposition

None on file.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097

 THIRD READING  

Bill No: SB 456

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 9-0, 4/19/17

AYES: Hernandez, Nguyen, Atkins, Leyva, Mitchell, Monning, Newman, Nielsen, Roth

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/25/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SUBJECT:

SOURCE: California Health+ Advocates

DIGEST:

This bill permits a federally qualified health center or rural health clinic to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient, as defined.

ANALYSIS:

Existing law:

1. 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. Federally qualified health center (FQHC) and rural health clinic (RHC) services are covered benefits under the Medi-Cal program.
   
2. Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers. The Medi-Cal reimbursement to FQHCs and RHCs on a per-visit rate is known as the Prospective Payment System (PPS).
   
3. Permits an FQHC or RHC to elect to have pharmacy or dental services reimbursed on a fee-for-service (FFS) basis, utilizing the current fee schedules established for those services. Requires these costs to be adjusted out of the FQHC’s or RHC’s clinic base rate as scope-of-service change.
   
4. Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles, as set forth in federal regulation.
   
5. 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, under the DHCS program, 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 or clinic 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 or clinic’s PPS rate. This DHCS payment to the FQHC or RHC is referred to as the “wrap around” payment.
   
6. 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.

This bill:

1. Permits an FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient, as defined.
2. Defines a “public or private entity” eligible to contract with an FQHC or RHC pursuant to an agreement described in this bill to include, but not be limited to, any of the following:
   
   1. A managed care health plan;
   2. A county;
   3. A health care district;
   4. A community-based organization; or,
   5. An individual health care or social services provider whose activities under this bill comply with the individual’s scope of practice or certification.
3. Defines “services that follow the patient” means services that are not reimbursable under existing FQHC PPS rate law and which promote continuity of care and contribute to overall patient wellness, including, but not limited to, all of the following:
   
   1. Comprehensive care management;
   2. Care coordination;
   3. Health and wellness initiatives;
   4. Comprehensive transitional care;
   5. Individual and family support services; and,
   6. Referral to community and social supports.
4. Requires compensation paid to an FQHC or RHC pursuant to an agreement described in this bill to be supplemental to, and separate from, the FQHC or RHC’s prospective payment rate, and prohibits the payment from being subject to a reconciliation or to any reduction.
   
5. Prohibits an FQHC or RHC that bills a public or private entity for services that follow the patient from seeking reimbursement or attempt to obtain payment from DHCS or an entity for a service billed pursuant to the existing PPS provisions.
   
6. Prohibits this bill from precluding an FQHC from billing a visit under the existing PPS provisions and a service under this bill on the same day.

Comments

1. Author’s statement. According to the author, a patient-centered medical home is a health care delivery system model in which health care providers work in partnership with one another, their patients, and their patients' families to coordinate care and ensure that patients receive the right care at the right time. Many FQHCs have incorporated patient-centered medical home or health home services into their practice – such as care coordination, health promotion, referrals to community and social supports, and individual/family support services. It is clear, however, that the FQHC scope of services and the FQHC PPS rates do not include the kind of comprehensive care management services contemplated under the health homes program demonstration. This has been demonstrated through FQHC payment policy for care management adopted by the federal Centers for Medicare and Medicaid Services (CMS) and by the federal health home rules adopted by other states. This bill is designed to fix the payment system so the state can continue to use health homes as a way of delivering primary care that helps people stay healthy by managing chronic conditions and keeping up with preventive care.
2. Current Medi-Cal reimbursement to FQHCs and RHCs. Federal Medicaid payment to FQHCs and RHCs are governed by state (Medi-Cal in California) and federal law. FQHCs and RHCs are both reimbursed under the PPS system. 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, the wrap around payment from DHCS would be $90. The Medi-Cal managed care wrap-around rate was established to comply with federal and state regulations requiring reimbursement to an FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
   
   This bill seeks to prevent additional payments made to FQHCs and RHCs from Medi-Cal managed care plans, counties and other entities for services that are separate from the PPS payment rate from being reduced through the DHCS audit process when the state reconciles payments made by plans to FQHCs and RHCs for the purpose of determining the amount the state must pay for “wrap around” Medi-Cal payments. This issue arose in the context of the health homes program State Plan Amendment (SPA) process for the first 11 counties chosen for the health homes program. DHCS’ proposed health homes program SPA stated that health home program payment services provided by an FQHC or RHC would be compensated separately from and in addition to the PPS rate received by an FQHC or RHC, and that this additional rate was to be deemed a supplemental rate for services not already included in the PPS rate calculation and therefore not subject to a reconciliation or other reduction.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• One-time costs, likely in the low hundreds of thousands, for revising regulations and seeking any necessary federal approvals to allow the payment procedures authorized under the bill (General Fund and federal funds).
• No significant increase in Medi-Cal spending is anticipated for services that the bill will authorize clinics to perform under contract. The bill specifically provides that any services performed by a clinic pursuant to this bill must be separate from a clinic’s PPS rate and that such clinics may not bill the Medi-Cal program using the PPS for any services provided under the bill. These constraints in the bill will prohibit participating clinics from providing services under contract that they are already paid to provide. While the bill allows clinics to participate in Medi-Cal programs, such as the Whole Person Care Pilots, participation by clinics will not increase the overall provision of Medi-Cal services. Rather, this will simply allow clinics to be one of the potential providers of services in those programs.
• Unknown potential costs for additional Medi-Cal services provided by clinics, due to the ability to provide existing Medi-Cal services and newly authorized services on the same day. Under current law, FQHCs and RHCs are prohibited from billing Medi-Cal for two face-to-face visits on the same day. This requirement was put into place to limit Medi-Cal spending, by requiring patients to come to a clinic on separate days to receive billable face-to-face services. The bill authorizes a clinic to provide both a billable face-to-face visit and provide additional services authorized in the bill on the same day. In theory, the ability to provide multiple services on the same day may increase utilization of Medi-Cal services, due to the convenience for patients of receiving services during one visit to a clinic. Whether this would significantly increase overall Medi-Cal spending is unknown.

SUPPORT: (Verified 5/22/17)

CaliforniaHealth+ Advocates (source)

Alameda Health Consortium

Alliance for Boys and Men of Color

Alliance for Rural Community HealthAPLA Health

Asian Pacific Health Care Venture, Inc.

Borrego Health

California Chapter of the American College of Emergency Physicians

California Retired Teachers Association

California School-Based Health Alliance

Capitol Health Network

Central Valley Health Network

Clinica Monsenor Oscar A. Romero

Clinicas de Salud del Pueblo, Inc.

Community Clinic Association of Los Angeles County

Community Clinic Consortium

Community Health Partnership

Community Health Systems, Inc.

East Valley Community Health Center

Eisner Health

El Proyecto del Barrio, Inc.

Harbor Community Clinic

Hill Country Community Clinic

Indian Health Center of Santa Clara Valley

LifeLong Medical Care

Marin Community Clinics

Neighborhood Healthcare

North East Medical Services

Northeast Valley Health Corporation

OLE Health

Omni Family Health

Open Door Community Health Center

Peach Tree Health

Redwood Community Health Coalition

Redwoods Rural Health Center

Ritter Center

San Francisco Community Clinic Consortium

San Ysidro Health Center

Santa Rosa Community Health Centers

Shasta Community Health Center

St. John’s Well Child & Family Center

St. Jude Neighborhood Health Centers

The Coalition of Orange County Community Health Centers

The Health Alliance of Northern California

Tiburcio Vasquez Health Center, Inc.

Venice Family Clinic

OPPOSITION: (Verified 5/22/17)

None received

ARGUMENTS IN SUPPORT: This bill is sponsored by CaliforniaHealth+ Advocates (CH+A), which represents California’s 1,150 not-for-profit community health centers. CH+A writes that FQHCs are reimbursed for the care they provide using an all-inclusive bundled payment rate called the PPS, and this rate is designed to reflect all of the services that an FQHC provides, but does not reimburse FQHCs for non-face-to-face activities that are required to provide comprehensive, coordinated care management for high-needs beneficiaries with complex conditions. CH+A writes that this bill will address this challenge and improve the health of California’s most vulnerable people by allowing health plans, counties, and others to partner with FQHCs to provide non-face-to-face services that promote continuity of care and wellness in ways not covered by PPS. CH+A writes that, without this bill, FQHCs and RHCs will be dis-incentivized and potentially prohibited from participating in innovative pilot and demonstration projects that are designed to improve health by addressing social determinants of health, continuity of care, and wellness. Creating a pathway to participation in one such project, titled the health homes program, was the inspiration for this bill. Other relevant projects include the “Medi-Cal 2020” Section 1115 Waiver Whole Person Care pilots, the Medicare Chronic Care Management program, or county and managed care organization-based case management programs.

Prepared by:

5/27/17 17:21:31

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 456 (Pan) - Medi-Cal managed care: federally qualified health centers and rural health clinics: services that follow the patient

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 456 would authorize a federally qualified health center or a rural health clinic to enter into an agreement to provide certain services, outside of the regular reimbursement structure for paying these clinics in the Medi-Cal program.

Fiscal Impact:

• One-time costs, likely in the low hundreds of thousands, for revising regulations and seeking any necessary federal approvals to allow the payment procedures authorized under the bill (General Fund and federal funds).
• No significant increase in Medi-Cal spending is anticipated for services that the bill would authorize clinics to perform under contract. The bill specifically provides that any services performed by a clinic pursuant to this bill must be separate from a clinic’s prospective payment rate and that such clinics may not bill the Medi-Cal program using the prospective payment system for any services provided under the bill. These constraints in the bill will prohibit participating clinics from providing services under contract that they are already paid to provide. While the bill would allow clinics to participate in Medi-Cal programs, such as the Whole Person Care Pilots, participation by clinics will not increase the overall provision of Medi-Cal services. Rather, this will simply allow clinics to be one of the potential providers of services in those programs.
• Unknown potential costs for additional Medi-Cal services provided by clinics, due to the ability to provide existing Medi-Cal services and newly authorized services on the same day. Under current law, federally qualified health centers and rural health clinics are prohibited from billing Medi-Cal for two face-to-face visits on the same day. This requirement was put into place to limit Medi-Cal spending, by requiring patients to come to a clinic on separate days to receive billable face-to-face services. The bill authorizes a clinic to provide both a billable face-to-face visit and provide additional services authorized in the bill on the same day. In theory, the ability to provide multiple services on the same day may increase utilization of Medi-Cal services, due to the convenience for patients of receiving services during one visit to a clinic. Whether this would significantly increase overall Medi-Cal spending is unknown.

Background:

Under current law, the Medi-Cal program provides health care coverage for certain low income and disabled individuals.

In the Medi-Cal fee-for-service system, federally qualified health centers (FQHCs) and rural health clinics (RHCs) are paid a per-visit payment known as the prospective payment system (PPS) rate. The PPS rate is based on a baseline rate that reflects a clinic’s costs to provide services in 1999-2000, adjusted for inflation. Those costs include the costs of eligible face-to-face visits (e.g. with a physician) and other services provided to Medi-Cal beneficiaries that are not eligible for billing as a face-to-face visit (e.g. visits with a registered nurse). When a Medi-Cal beneficiary in the managed care system receives care from an FQHC or RHC, the managed care plan makes a per-visit payment to the clinic. Because the rates paid by managed care plans are significantly below the PPS rate, the state makes a supplemental “wrap-around” payment to the clinic to bring the total payment up to the PPS rate. Current law limits clinics to being reimbursed for one face-to-face visit per day.

There are certain programs within Medi-Cal that allow for additional services, not normally provided through Medi-Cal, to certain populations. The Health Home Program allows for additional services, such as enhanced care coordination, for Medi-Cal enrollees with chronic conditions. Similarly, the Whole Person Care program, authorized in the state’s new Section 1115 waiver, allows participating lead entities (primarily counties) to claim federal matching funds for efforts to coordinate health, behavioral health, and social services for high-risk Medi-Cal beneficiaries who are high-utilizers of health care services. Federal matching funds will be available for a variety of social services and supports that are not eligible for federal matching funds absent the waiver.

Proposed Law:

SB 456 would authorize a federally qualified health center or a rural health clinic to enter into an agreement to provide certain services, outside of the regular reimbursement structure for paying these clinics in the Medi-Cal program.

Specific provisions of the bill would:

• Authorize a federally qualified health center or a rural health clinic to enter into an agreement with a public or private entity to provide “services that follow the patient”;
• Specify (but not limit) the organizations that clinics could contract with;
• Specify (but not limit) the services that could be provided;
• Require that compensation provided to a clinic under the bill be supplemental to and separate from the clinic’s prospective payment rate;
• Prohibit a participating clinic from seeking reimbursement from the state for services provided under the bill;
• Authorize a participating clinic to provide a face-to-face visit and services authorized under the bill on the same day.

Related Legislation:

SB 323 (Mitchell) would authorize federally qualified health clinics and rural health clinics to receive reimbursement from county mental health plans for specialty mental health services and through Drug Medi-Cal, outside of the regular reimbursement structure for paying these clinics in the Medi-Cal program. That bill will be heard in this committee.

Staff Comments:

The provisions of this bill are based on requirements in the State Plan Amendment implementing the Health Home Program. The intent of this bill is to allow federally qualified health centers and rural health clinics to provide some of the additional services that are authorized under Whole Person Care Program or other similar programs, without impacting the existing system for paying those clinics to provide services to Medi-Cal beneficiaries.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 456

SUBJECT: Medi-Cal managed care: federally qualified health centers and rural health clinics: services that follow the patient

SUMMARY:

Permits a federally qualified health center or rural health clinic to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient, as defined.

Existing law:

1. 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. Federally qualified health center (FQHC) and rural health clinic (RHC) services are covered benefits under the Medi-Cal program.
   
2. Requires FQHCs and RHCs to be reimbursed on a per-visit basis. Defines a “visit” as a face-to-face encounter between an FQHC or RHC patient and specified health care providers. The Medi-Cal reimbursement to FQHCs and RHCs on a per-visit rate is known as the Prospective Payment System (PPS).
   
3. Permits an FQHC or RHC to elect to have pharmacy or dental services reimbursed on a fee-for-service (FFS) basis, utilizing the current fee schedules established for those services. Requires these costs to be adjusted out of the FQHC’s or RHC’s clinic base rate as scope-of-service change.
   
4. Permits an FQHC or RHC to apply for an adjustment to its per-visit rate based on a change in the scope of services provided by the FQHC or RHC. Requires rate changes based on a change in the scope of services provided by an FQHC or RHC to be evaluated in accordance with Medicare reasonable cost principles, as set forth in federal regulation.
   
5. 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, under the DHCS program, 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 or clinic 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 or clinic’s PPS rate. This DHCS payment to the FQHC or RHC is referred to as the “wrap around” payment.
   
6. 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.

This bill:

1. Permits a FQHC or RHC to enter into an agreement with a public or private entity willing and qualified to provide services that follow the patient, as defined.
2. Defines a “public or private entity” eligible to contract with an FQHC or RHC pursuant to an agreement described in this bill to include, but not be limited to, any of the following:
   
   1. A managed care health plan;
   2. A county;
   3. A health care district;
   4. A community-based organization; or,
   5. An individual health care or social services provider whose activities under this bill comply with the individual’s scope of practice or certification.
3. Defines “services that follow the patient” means services that promote continuity of care and contribute to overall patient wellness, including, but not limited to, all of the following:
   
   1. Comprehensive care management;
   2. Care coordination;
   3. Health and wellness initiatives;
   4. Comprehensive transitional care;
   5. Individual and family support services; and,
   6. Referral to community and social supports.
4. Requires compensation paid to a FQHC or RHC pursuant to an agreement described in this bill to be supplemental to, and separate from, the FQHC or RHC’s prospective payment rate, and prohibits the payment from being subject to a reconciliation or to any reduction.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, a patient-centered medical home is a health care delivery system model in which health care providers work in partnership with one another, their patients, and their patients' families to coordinate care and ensure that patients receive the right care at the right time. Many FQHCs have incorporated patient-centered medical home or health home services into their practice – such as care coordination, health promotion, referrals to community and social supports, and individual/family support services. It is clear, however, that the FQHC scope of services and the FQHC PPS rates do not include the kind of comprehensive care management services contemplated under the health homes program demonstration. This has been demonstrated through FQHC payment policy for care management adopted by the federal Centers for Medicare and Medicaid Services (CMS) and by the federal health home rules adopted by other states. This bill is designed to fix the payment system so the state can continue to use health homes as a way of delivering primary care that helps people stay healthy by managing chronic conditions and keeping up with preventive care.
2. Current Medi-Cal reimbursement to FQHCs and RHCs. Federal Medicaid payment to FQHCs and RHCs are governed by state (Medi-Cal in California) and federal law. FQHCs and RHCs are both reimbursed under the PPS system. 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, the wrap around payment from DHCS would be $90. The Medi-Cal managed care wrap-around rate was established to comply with federal and state regulations requiring reimbursement to an FQHC or RHC for the difference between their PPS rate and their Medi-Cal managed care reimbursement.
   
   This bill seeks to prevent additional payments made to FQHCs and RHCs from Medi-Cal managed care plans, counties and other entities for services that are separate from the PPS payment rate from being reduced through the DHCS audit process when the state reconciles payments made by plans to FQHCs and RHCs for the purpose of determining the amount the state must pay for “wrap around” Medi-Cal payments. This issue arose in the context of the health homes program State Plan Amendment (SPA) process for the first 11 counties chosen for the health homes program. DHCS’ proposed health homes program SPA stated that health home program payment services provided by an FQHC or RHC would be compensated separately from and in addition to the PPS rate received by an FQHC or RHC, and that this additional rate was to be deemed a supplemental rate for services not already included in the PPS rate calculation and therefore not subject to a reconciliation or other reduction.
   
3. Prior legislation. SB 147 (Hernandez, Chapter 760, Statutes of 2014) requires DHCS to authorize a three-year payment reform pilot project for FQHCs using an alternative payment methodology (APM) authorized under federal Medicaid law. SB 147 requires an FQHC participating in the pilot to receive a per member per month (PMPM) payment for each of its APM enrollees from a Medi-Cal managed care health plan, instead of the wrap around payment FQHCs currently receive from DHCS.

SB 361 (Mitchell, Chapter 642, Statutes of 2013) authorized DHCS to establish a California Health Home Program to provide health home services to Medi-Cal beneficiaries and Section 1115 waiver demonstration populations with chronic conditions. SB 361 is to be implemented only if federal financial participation is available and the federal Centers for Medicare and Medicaid Services (CMS) approve the SPA.

1. Support. This bill is sponsored by CaliforniaHealth+ Advocates, which represents California’s 1,150 not-for-profit community health centers. CH+A writes that FQHCs are reimbursed for the care they provide using an all-inclusive bundled payment rate called the PPS, and this rate is designed to reflect all of the services that an FQHC provides, but does not reimburse FQHCs for non-face-to-face activities that are required to provide comprehensive, coordinated care management for high-needs beneficiaries with complex conditions. CH+A writes that this bill will address this challenge and improve the health of California’s most vulnerable people by allowing health plans, counties, and others to partner with FQHCs to provide non-face-to-face services that promote continuity of care and wellness in ways not covered by PPS. CH+A writes that, without this bill, FQHCs and RHCs will be dis-incentivized and potentially prohibited from participating in innovative pilot and demonstration projects that are designed to improve health by addressing social determinants of health, continuity of care, and wellness. Creating a pathway to participation in one such project, titled the health homes program, was the inspiration for this bill. Other relevant projects include the “Medi-Cal 2020” Section 1115 Waiver Whole Person Care pilots, the Medicare Chronic Care Management program, or county and managed care organization-based case management programs.
2. Policy issue. The bill is drafted broadly to allow payment for “services that follow the patient” to means services that promote continuity of care and contribute to overall patient wellness, defined to include but not be limited to specific services, such as comprehensive care management, case coordination, and health and wellness initiatives. These services would not be subject to a reconciliation or reduction by DHCS.
   
   To ensure there is no duplication of payment or billing for services that are currently reimbursable under PPS, staff recommends language that the services authorized for payment under this bill are services that are not currently reimbursable or billed under the existing PPS rate structure.

SUPPORT AND OPPOSITION:

Support: CaliforniaHealth+ Advocates (sponsor)

Alameda Health Consortium

Alliance for Boys and Men of Color

Alliance for Rural Community Health
APLA Health

Asian Pacific Health Care Venture, Inc.

Borrego Health

California Chapter of the American College of Emergency Physicians

California Retired Teachers Association

California School-Based Health Alliance
Capitol Health Network

Central Valley Health Network

Clinica Monsenor Oscar A. Romero

Clinicas de Salud del Pueblo, Inc.

Community Clinic Association of Los Angeles County

Community Clinic Consortium

Community Health Partnership

Community Health Systems, Inc.

East Valley Community Health Center

Eisner Health

El Proyecto del Barrio, Inc.

Harbor Community Clinic

Hill Country Community Clinic

Indian Health Center of Santa Clara Valley

LifeLong Medical Care

Marin Community Clinics

Neighborhood Healthcare

North East Medical Services

Northeast Valley Health Corporation

OLE Health

Omni Family Health

Open Door Community Health Center

Peach Tree Health

Redwood Community Health Coalition

Redwoods Rural Health Center

Ritter Center

San Francisco Community Clinic Consortium

San Ysidro Health Center

Santa Rosa Community Health Centers

Shasta Community Health Center

St. John’s Well Child & Family Center

St. Jude Neighborhood Health Centers

The Coalition of Orange County Community Health Centers

The Health Alliance of Northern California

Tiburcio Vasquez Health Center, Inc.

Venice Family Clinic

Oppose: None received

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