BILL NUMBER: SB 147 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 7, 2015
INTRODUCED BY Senator Hernandez
JANUARY 28, 2015
An act to add Section 14132.103 to Article
4.1 (commencing with Section 14138.1) to Chapter 7 of Part 3 of
Division 9 of the Welfare and Institutions Code, relating to
Medi-Cal.
LEGISLATIVE COUNSEL'S DIGEST
SB 147, as amended, Hernandez. Federally qualified health centers.
Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services, under
which qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by federal
Medicaid Program provisions. Existing law provides that federally
qualified health center (FQHC) services, as described, are covered
benefits under the Medi-Cal program, to be reimbursed, to the extent
that federal financial participation is obtained, to providers on a
per-visit basis. "Visit" is defined as a face-to-face encounter
between a patient of an FQHC and specified health care professionals.
Existing federal law authorizes a state plan to provide for payment
in any fiscal year to an FQHC for specified services in an amount
that is determined under an alternative payment methodology (APM) if
it is agreed to by the state and the FQHC and results in a payment to
the FQHC of an amount that is at least equal to the amount otherwise
required to be paid to the FQHC.
This bill would require the department to authorize a 3-year APM
pilot project project, to commence no sooner
than July 1, 2016, for FQHCs that would be implemented
in any county and FQHC willing to participate. that
agree to participate. The bill would require the department to
determine an APM supplemental capitation amount for each APM aid
category to be paid by the department to each principle health plan
that contains at least one participating FQHC in its provider
network, as specified. Under the APM pilot project,
participating FQHCs would receive capitated monthly payments
for each Medi-Cal managed care enrollee assigned to the FQHC in
place of the wrap-around, fee-for-service per-visit payments from the
department. a per member per month wrap-cap payment
for each of its APM enrollees, as specified. The bill would require
each principal health plan to pay a participating FQHC that is in the
plan provider network the wrap-cap amounts, as determined, for each
APM enrollee of that FQHC. The bill would require, except as
specified, that an evaluation of the APM pilot project be
conducted completed by an independent entity
within 6 months after the APM pilot project is completed,
of the conclusion of the APM pilot project, and
that would require the independent
entity to report the findings to the department and the
Legislature.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 4.1 (commencing with Section
14138.1) is added to Chapter 7 of Part 3 of Division 9 of the
Welfare and Institutions Code , to read:
Article 4.1. Payment Reform Pilot Program for Federally
Qualified Health Centers.
14138.1. For purposes of this article, the following definitions
apply:
(a) "Alternative payment methodology" (APM) has the same meaning
as specified in Section 1396a(bb)(6) of Title 42 of the United States
Code.
(b) "APM aid category" means a Medi-Cal category of aid designated
by the department. For all its APM enrollees in an APM aid category,
a participating FQHC site shall receive compensation as described
under the APM pilot project. The APM aid categories may include, but
are not limited to, all of the following categories of aid:
(1) Adults.
(2) Children.
(3) Seniors and persons with disabilities.
(4) The adult expansion population eligible pursuant to Section
14005.60.
(c) "APM enrollee" means a member who is assigned by a principal
health plan or secondary payer to a participating FQHC for primary
care services and who is within one of the designated APM aid
categories.
(d) "APM enrollee true-up" means the process by which payments are
adjusted to reflect changes in the number of APM enrollees, by APM
aid category, for participating FQHCs.
(e) "APM pilot project" means the pilot project authorized by this
article.
(f) "APM scope of services" means the scope of services for a
participating FQHC for which its per-visit rate was determined
pursuant to Section 14132.100.
(g) "APM supplemental capitation" means an additional, APM aid
category-specific, PMPM amount that is paid by the department to a
principal health plan having one or more participating FQHCs in its
provider network.
(h) "Base payment" means the amount that would have been paid, in
the absence of the APM pilot project, by a principal health plan and
any secondary payer, as applicable, to an FQHC for patient services
in the APM scope of services with respect to APM enrollees of the
FQHC pursuant to its contract, exclusive of any incentive payments.
(i) "FQHC" means any community or public "federally qualified
health center," as defined in Section 1396d(l)(2)(B) of Title 42 of
the United States Code and providing services as defined in Section
1396d(a)(2)(C) of Title 42 of the United States Code.
(j) "Member" means a Medi-Cal beneficiary who is enrolled with a
principal health plan or secondary payer.
(k) "Participating FQHC" means a FQHC participating in the APM
pilot project at one or more of the FQHC's sites.
(l) "PMPM" and "per member per month" both mean a monthly payment
made for providing or arranging health care services for a member and
may refer to a payment by the department to a principal health plan,
or by a principal health plan to a secondary payer, or by a
principal health plan or secondary payer to an FQHC, or from and to
other entities as specified in this article.
(m) "Principal health plan" means an organization or entity that
enters into a contract with the department pursuant to Article 2.7
(commencing with Section 14087.3), Article 2.8 (commencing with
Section 14087.5), Article 2.81 (commencing with Section 14087.96),
Article 2.82 (commencing with Section 14087.98), Article 2.91
(commencing with Section 14089), or Chapter 8 (commencing with
Section 14200), to provide or arrange for the care of Medi-Cal
beneficiaries within a county in which the APM pilot project is
implemented.
(n) "Secondary payer" means an organization or entity that
subcontracts with a principal health plan to provide or arrange for
the care of its members and contains one or more participating FQHCs
in its provider network.
(o) "Traditional wrap-around payment" means the supplemental
payments payable to an FQHC in the absence of the APM pilot project
with respect to services provided to Medi-Cal managed care enrollees,
which are made by the department pursuant to subdivision (e) of
Section 14087.325 and subdivision (h) of Section 14132.100.
(p) "Wrap-cap" means a prospective PMPM amount that is determined
by APM aid category for each participating FQHC site, and is paid
monthly by a principal health plan or secondary payer to the
participating FQHC with respect to its APM enrollees in each APM aid
category in lieu of a traditional wraparound payment.
14138.10. The Legislature finds and declares all of the following
:
(a) The federal Affordable Care Act has made and continues to make
significant progress in driving health care delivery system reforms
that emphasize health outcomes, efficiency, patient satisfaction and
value.
(b) California has expanded Medi-Cal to cover more than 12 million
residents, roughly one-third of the state's population. To meet the
needs of the state's growing patient population, California must
continue to explore new strategies to expand access to high quality
and cost effective primary care services.
(c) With such a large portion of the state's population receiving
health care services through Medi-Cal, it is imperative that
patient-centered innovations drive Medi-Cal reforms.
(d) Health care today is more than a face to face visit with a
provider, but rather a whole-person approach, often including a
physician, a care team of other health care providers, technology
inside and outside of a health center, and wellness activities
including nutrition and exercise classes, all of which are designed
to be more easily incorporated into a patient's daily life.
(e) Accessible health care in a manner that fits a patient's needs
is important for improving patient satisfaction, building trust, and
ultimately improving health outcomes.
(f) In an attempt to invest up-front in health care services that
can prevent longer-term avoidable high cost services, the Affordable
Care Act made a significant investment in FQHCs.
(g) FQHCs are essential community providers, providing high
quality, cost-effective comprehensive primary care services to
underserved communities.
(h) Today FQHCs face restrictions, however, because the current
payment structure reimburses an FQHC only when there is a
face-to-face visit with a provider. Current law prohibits payment for
a primary care visit and mental health visit on the same day, a
restriction that inhibits coordination and efficiency.
(i) A more practical approach financially incentivizes FQHCs to
provide the right care at the right time. Restructuring the current
visit based, fee-for-service model with a capitated equivalent
affords FQHCs the assurance of payment and the flexibility to deliver
care in the most appropriate patient-centered manner.
(j) A reformed payment methodology will enable FQHCs to take
advantage of alternative touches. Alternative touches, such as
same-day mental health services and phone and email consultations,
are effective care delivery methods and contribute to a patient's
overall health and well-being.
14138.11. It is the intent of the Legislature to test an
alternative payment methodology for FQHCs, as permitted by federal
law, and to design and implement the APM to do all of the following:
(a) Provide patient centered care delivery options to California's
expansive Medi-Cal population.
(b) Promote cost efficiencies, and improve population health and
patient satisfaction.
(c) Improve the capacity of FQHCs to deliver high quality care to
a population growing in numbers and in complexity of needs.
(d) Transition away from a payment system that rewards volume with
a flexible alternative that recognizes the value added when Medi-Cal
beneficiaries are able to more easily access the care they need and
when providers are able to deliver care in the most appropriate
manner to patients.
(e) Track alternative touches at FQHCs in order to establish a
data set from which alternative touches may be assigned a value that
can be used in future rate setting.
(f) Implement the APM where the FQHC receives at least the same
amount of funding it would receive under the current payment system,
and in a manner that does not disrupt patient care or threaten FQHC
viability.
14138.12. (a) The department shall authorize a three-year payment
reform pilot project for FQHCs using an APM in accordance with this
article. Implementation of the APM pilot project shall begin no
sooner than July 1, 2016, subject to federal approval.
(b) The APM pilot project shall comply with federal APM
requirements and the department shall file a state plan amendment as
necessary for the implementation of this article.
(c) Nothing in this article shall be construed to limit or
eliminate services provided by FQHCs as covered benefits in the
Medi-Cal program.
14138.13. (a) To implement this article, the department shall
notify every FQHC of the APM pilot project and shall invite any
interested FQHC to notify the department that the FQHC agrees to
participate with respect to one or more of the FQHC's sites.
Consistent with federal law, the state plan amendment described in
subdivision (b) of Section 14138.12 shall specify that the department
and participating FQHCs agree to the APM.
(b) The APM shall be applied only with respect to a participating
FQHC for services the FQHC provides to its APM enrollees that are
within its APM scope of services.
(c) Payment to the participating FQHC shall continue to be
governed by the provisions of Sections 14132.100 and 14087.325 for
services provided with respect to both of the following categories of
patients:
(1) A beneficiary who receives services from any FQHC to which the
beneficiary is not assigned for primary care services under the APM
pilot project by a principal health plan or secondary payer.
(2) A person who is not a Medi-Cal beneficiary within a designated
APM aid category.
(d) (1) A participating FQHC, with respect to one or more sites of
its choosing, may opt to discontinue its participation in the pilot
project subject to a notice requirement of no less than 30 days and
no greater than 45 days, as established by the department.
(2) A principal health plan may opt to discontinue its
participation in the pilot project, subject to a notice requirement
of no less than 30 days and no greater than 45 days, as established
by the department, if subdivision (f) of Section 14138.14 is amended
at any time while the pilot project is in effect. The department
shall place a provision in a plan's contract giving the plan the
ability to discontinue its participation in the APM pilot project
pursuant to this paragraph.
14138.14. (a) A participating FQHC shall be compensated for the
APM scope of services provided to its APM enrollees pursuant to this
section.
(b) (1) A participating FQHC shall, in addition to its base
payment, and any applicable incentive payment, receive a PMPM
wrap-cap payment for each of its APM enrollees as described in
subdivision (d). The department shall determine the wrap-cap amount
specific to each participating FQHC, and for each APM aid category.
For this purpose, the department shall, in consultation with each
participating FQHC and health plan, use the best available data for a
recent agreed-upon time period that reflects the audit and
reconciliation payment adjustments for the participating FQHC, which
may be composite data from different or multiple periods. The
determinations shall, at a minimum, take into account the following
factors:
(A) An estimation of the amount of traditional wrap-around
payments that would have been paid to the participating FQHC with
respect to APM enrollees for the APM scope of services in the absence
of the APM pilot project. For each APM aid category, the estimation
shall be no less than the participating FQHC's historical utilization
for assigned members for a 12 month period reflected in the data
being used, multiplied by its prospective payment system rate, as
determined pursuant to Section 14132.100, less any payments for the
APM scope of services, exclusive of incentive payments, that were
received from principal health plans and any secondary payers for the
relevant period for assigned members, and shall be calculated on a
PMPM basis.
(B) An estimation of service utilization for each APM aid
category in the absence of the APM pilot project, including estimates
of the utilization of services to be provided, and utilization and
types of services not previously provided, reflected or identifiable
in the prior period data.
(2) The wrap-cap payments shall not be decreased for the first
three years of the APM pilot project, unless agreed to by the
department and the applicable participating FQHC.
(c) (1) For each principal health plan that contains at least one
participating FQHC in its provider network, the department shall
determine an APM supplemental capitation amount for each APM aid
category to be paid by the department to the principal health plan,
which shall be expressed as a PMPM amount. The APM supplemental
capitation amount shall be a weighted average of the aggregate
wrap-cap amounts determined in subdivision (b), that at a minimum
takes into account an estimation of the distribution of APM enrollees
among the participating FQHCs for each APM aid category.
(2) The APM supplemental capitation amounts shall not be decreased
for the first three years of the APM pilot project, unless agreed to
by the department and the principal health plan.
(d) Notwithstanding any other law, each principal health plan
shall pay a participating FQHC that is in the plan provider network
the wrap-cap amounts determined in subdivision (b) for each APM
enrollee of that FQHC, or, in cases where a secondary payer is
involved, provide the necessary amounts to the secondary payer and
require that secondary payer to make the required wrap-cap payments
to the FQHC. The principal health plan, secondary payer, as
applicable, and the participating FQHC may choose the manner in which
the wrap-cap payments are made, provided the resulting payment is
equal to the full amount of the wrap-cap payments to which the
participating FQHC is entitled, taking into account, among others,
changes in the number of APM enrollees within the APM aid categories.
In cases where a secondary payer is involved, the principal health
plan shall demonstrate and certify to the department that it has
contracts or other arrangements in place that provide for meeting the
requirements herein and to the extent that the secondary payer fails
to comply with the applicable requirements in this article, the
principal health plan shall then be responsible to ensure the
participating FQHC receives all payments due under this article in a
timely manner.
(e) The department shall adjust the amounts in subdivisions (b)
and (c) at least annually for any change to the prospective payment
system rate for participating FQHCs, including changes resulting from
a change in the Medicare Economic Index pursuant to subdivision (d)
of Section 14132.100, and any changes in the FQHC's scope of services
pursuant to subdivision (e) of Section 14132.100.
(f) During the duration of the APM pilot project, the department
shall establish a risk corridor structure for the principal health
plans relating to the payment requirement of subdivision (d),
designed within the following parameters:
(1) (A) The principal health plan is fully responsible for the
total aggregate costs of the wrap-cap payments for all APM aid
categories to participating FQHCs in its network in excess of the
total aggregate APM supplemental capitation amount for all APM aid
categories up to one half of one percent.
(B) The principal health plan shall fully retain the aggregate APM
supplemental capitation amount in excess of the total aggregate
costs of the wrap-cap payments for all APM aid categories incurred up
to one half of one percent.
(2) (A) The principal health plan and the department shall share
responsibility for the total aggregate costs of the wrap-cap payments
for all APM aid categories to participating FQHCs in the principal
health plan's network that are between one half of one percent above
and up to one percent above the total aggregate APM supplemental
capitation amount for all APM aid categories.
(B) The principal health plan and the department shall share the
benefit of the aggregate APM supplemental capitation amount in excess
of the total aggregate costs of the wrap-cap payments for all APM
aid categories incurred that are between one half of one percent and
up to one percent below the total aggregate APM supplemental
capitation amount.
(3) (A) The department shall be fully responsible for the total
aggregate costs of the wrap-cap payments for all APM aid categories
to participating FQHCs in the principal health plan's network that
are more than one percent in excess of the principal health plan's
total aggregate APM supplemental capitation amount for all APM aid
categories.
(B) The department shall fully retain the aggregate APM
supplemental capitation amount in excess of the total aggregate costs
of the wrap-cap payments for all APM aid categories to participating
FQHCs in the principal health plan's network that are greater than
one percent below the total aggregate APM supplemental capitation
amount.
(g) In order to ensure participating FQHCs have an incentive to
manage visits and costs, while at the same time exercising a
reasonable amount of flexibility to deliver care in the most
efficient and quality driven manner, during the duration of the APM
pilot project the department shall, in accordance with this
subdivision, establish a rate adjustment structure. The rate
adjustment structure shall be developed with stakeholder input and
shall meet the requirements of Section 1396a(bb)(6)(B) of title 42 of
the United States Code.
(1) The rate adjustment structure shall be applicable on a
site-specific basis.
(2) The rate adjustment structure shall permit an aggregate
adjustment to the wrap-cap when actual utilization of services for a
participating FQHC's site exceeds or falls below expectations that
were reflected within the calculation of the rates developed pursuant
to subdivisions (b), (c), and (d). For purposes of this rate
adjustment structure, both actual and expected utilization shall be
expressed as the total number of visits that would be recognized
pursuant to subdivision (g) of Section 14132.100 for the APM
enrollees of the participating FQHC's site across all APM aid
categories and averaged on a per member per year basis.
(3) An adjustment pursuant to this subdivision shall occur no more
than once per year per participating FQHC's site during the three
years of the APM pilot project and shall be subject to approval by
the department.
(A) An adjustment to the wrap-cap payments in the case of higher
than expected utilization shall be triggered when utilization exceeds
projections by more than five percent for the first year, seven and
one-half percent for the second year, and ten percent for the third
year. If the trigger level is reached, the affected FQHC's site shall
receive an aggregate payment adjustment that is based upon the
difference between its actual utilization for the year and one
hundred five percent of projected utilization for the first year, the
difference between actual utilization and one hundred seven and
one-half percent of projected utilization for the second year, and
the difference between actual utilization and one hundred ten percent
of projected utilization for the third year. The payment adjustment
in each instance shall be calculated as follows:
(i) The difference in the applicable utilization levels shall be
multiplied by the per-visit rate that was determined pursuant to
Section 14132.100 for the participating FQHC's site.
(ii) The total number of member months for the APM enrollees of
the participating FQHC's site for the year shall be divided by
twelve.
(iii) The amount in clause (i) shall be multiplied by the amount
in clause (ii), yielding the aggregate wrap-cap payment adjustment
for the participating FQHC's site. The rate adjustment shall be paid
to the participating FQHC site by the principal health plan, or
secondary payer as applicable, in one aggregate payment.
(B) (i) To incentivize care delivery in ways that may vary from
traditional delivery of care, participating FQHCs shall have the
flexibility to experience a lower than expected visit utilization of
up to thirty percent of projected utilization. If an FQHC site's
actual utilization is at a level that is more than thirty percent
lower than the projected utilization, the principal health plan, or
secondary payer as applicable, shall review the FQHC site's relevant
data to identify the cause or causes of the difference. If the
principal health plan or secondary payer determines that the lower
than expected utilization was due to factors unrelated to delivery
system transformation and enhancements, it may require the FQHC's
site to refund a portion of the wrap-cap payments.
(ii) The total amount refunded by the participating FQHC's site to
the principal health plan or secondary payer shall be limited to an
amount calculated as follows:
(I) The difference between the participating FQHC site's actual
utilization and seventy percent of the projected utilization shall be
multiplied by the site's per-visit rate that was determined pursuant
to Section 14132.100.
(II) The total number of member months for the APM enrollees of
the participating FQHC's site for the year shall be divided by
twelve.
(III) The amount in subclause (I) shall be multiplied by the
amount in subclause (II), yielding the maximum amount of the refund
to be made by the participating FQHC's site. The refund shall be paid
in one aggregate payment.
(iii) Any adjustment made pursuant to this subparagraph shall be
requested by a principal health plan, secondary payer, or FQHC, no
later than 90 days after the last day of the fiscal year for which
the adjustment is sought.
(4) The department, in consultation with FQHCs and principal
health plans interested in participating in the APM pilot project,
may modify the adjustment process or methodology specified in this
section to the extent necessary to comply with federal law and obtain
federal approval of necessary amendments to the Medi-Cal state plan.
(h) The total APM supplemental capitation amounts paid to
principal health plans shall be adjusted by the department as
necessary to take into account adjustments to the number of APM
enrollees by APM aid category no later than the 10th day of each
month.
(i) A participating FQHC or principal health plan or the
department may request an APM enrollee true-up to assure the total
amount of the APM supplemental capitation or wrap-cap payments, as
applicable, are adjusted to accurately reflect the number of
applicable APM enrollees.
(j) An FQHC site participating in the APM pilot project shall not
receive traditional wrap-around payments pursuant to Sections
14132.100 and 14087.325 for visits within the APM scope of services
it provides to its APM
enrollees.
14138.15. (a) (1) Within six months of the conclusion of pilot
project, an evaluation shall be completed by an independent entity.
This independent entity shall report its findings to the department
and the Legislature. The evaluation shall be contingent on the
availability of nonstate General Fund moneys for this purpose.
(2) A report submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
(b) The evaluation shall assess whether the APM pilot project
produced improvements in access to primary care services, care
quality, patient experience, and overall health outcomes for APM
enrollees. The evaluation shall include existing FQHC required
quality metrics and an assessment of how the changes in financing
allowed for alternative types of primary care visits and alternative
touches between the participating FQHC and the patient. The
evaluation shall also assess whether the APM pilot project's efforts
to improve primary care resulted in changes to patient service
utilization patterns, including the reduced utilization of avoidable
high cost services.
SECTION 1. Section 14132.103 is added to the
Welfare and Institutions Code, to read:
14132.103. (a) Notwithstanding any other law, the department
shall authorize a three-year alternative payment methodology (APM)
pilot project for federally qualified health centers (FQHCs) in
accordance with this section.
(b) The APM shall be implemented in any county and FQHC willing to
participate.
(c) Under the APM pilot project, participating FQHCs shall receive
capitated monthly payments for each Medi-Cal managed care enrollee
assigned to the FQHC in place of the wrap-around, fee-for-service
per-visit payments from the department.
(d) The APM shall include all necessary protections and
safeguards, for both the FQHCs and the health plans, to ensure that
neither are financially harmed by the implementation of the APM in
relation to both rates and number of enrollees assigned.
(e) (1) Within six months after the APM pilot project is
completed, an evaluation of the pilot project shall be conducted by
an independent entity that takes into consideration payment adequacy,
delivery system transformation, and quality measures. The
independent entity shall report its findings to the department and
the Legislature. An evaluation pursuant to this subdivision shall be
completed only if there are nonstate General Fund moneys available
for this purpose.
(2) A report submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
(f) The department shall seek any federal approvals necessary for
the implementation of this section.