APRIL 2020 Issue Brief Same-Day Billing for Medical and Mental Health Services at FQHCs: Estimating the Fiscal Impact T his issue brief provides an analysis of the fiscal impact in California of same-day billing for medical Findings and mental health services in Federally Qualified Findings are based on 2017–18 data and the scenarios Health Centers (FQHCs). described below (see Methodology section on page 2). FQHCs are paid by Medi-Cal under the Prospective Payment System (PPS). In California, each licensed clini- Same-Day Billing Without a Change- cal site (clinic site) has its own PPS rate, with a fixed in-Scope Requirement per-visit dollar amount payment rate for qualifying vis- Using the Scenario 1 methodology described below, its. These rates are increased by the Medicare Economic total estimated increased Medi-Cal reimbursement costs Index (MEI) each year. FQHCs may also apply for a rate would be approximately $23.4 million. change through the Medi-Cal Change in Scope-of- Service Request process. With same-day billing not requiring a change in scope, California FQHCs would be projected to provide (and bill Currently, while FQHCs may render both medical and for) approximately 63,000 new Medi-Cal mental health mental health services on the same day to Medi-Cal visits. In addition, they would be projected to bill for patients, they cannot be reimbursed for both visits. approximately 50,000 existing unbilled same-day visits California has considered several proposals to allow (reflecting an estimated number of visits that FQHCs FQHCs to bill a medical visit and a mental health visit are currently providing but not billing for because of the that take place on the same day at a single location as existing prohibition on same-day billing). separate visits, referred to as “same-day billing.” The analysis that follows estimates the impact of a Same-Day Billing with a Change-in- policy change to allow same-day billing both without Scope Requirement (Scenario  1) and with (Scenario 2) a requirement that Using the Scenario 2 methodology described below, FQHCs apply for a change in scope in order to have the total estimated increased Medi-Cal reimbursement costs option of billing for same-day visits for mental health. would be approximately $232 million. Of this amount, The analysis is not specific to a particular current or past approximately $11 million would be from increased men- proposal. The analysis provides an estimate of the annual tal health billing, and approximately $221 million would impact of the two scenarios on both Medi-Cal mental be from billing for medical visits at the higher PPS rate health visits and Medi-Cal reimbursement costs. (after change in scope). With same-day billing requiring a change in scope, California FQHCs would be projected to provide (and bill for) approximately 26,000 new Medi-Cal mental health visits. In addition, they would be projected to bill for approximately 21,000 existing unbilled same-day Table 1. Summary of Estimated Visits and Incremental Reimbursement Costs SCENARIO 1 SCENARIO 2 WITHOUT A CHANGE-IN-SCOPE REQUIREMENT WITH A CHANGE-IN-SCOPE REQUIREMENT Existing (currently unbilled) Mental Health Visits 50,500 20,600 New Medi-Cal Mental Health Visits 63,100 25,800 Total Incremental Mental Health Visits Billed to Medi-Cal 113,600 46,400 Cost from Change in Scope $220,500,000 (cost for non-mental health visits billed at new PPS rate) Cost from New and Newly Billed Mental Health Visits $23,400,000 $11,200,000 Total Incremental Reimbursement Costs to State $23,400,000 $231,700,000 visits (reflecting an estimated number of visits that FQHCs Scenario 1 and Scenario 2 are currently providing but not billing for because of the These scenarios were applied to clinic sites individually existing prohibition on same-day billing). and then summed together to develop the findings. For illustrative purposes, a sample of the clinic site data that was used to develop these findings has been provided in Methodology Exhibit A and Exhibit B. See “Sample Data from Analysis of Same-Day Billing for Medical and Mental Health Services at FQHCs, Exhibit A: Findings have been developed using estimates that Without Change in Scope and Exhibit B: With Change in leaned toward an overstatement of the impact to the Scope” for detailed analysis and computation of results. state, given the available data inputs. The methodologies, including calculations and assump- Data Sources tions, are as follows: Both of the scenarios noted above were developed using the following data sources: A “New” mental health services rendered on the same day. “New” visits that would result from $ Mental health visits by clinic — 2017 Primary changes to the existing same-day billing restriction Care Clinic Annual Utilization Data (October were estimated at 10% annually per clinic site. 2018), Office of Statewide Health Planning and Development (OSHPD) This estimated increase in mental health visits was based on expert opinion of seven FQHC providers $ Medi-Cal PPS rates by clinic site — published rates and administrators. As part of this project, the author as of November 2018 from the Department of convened a conference call on July 31, 2019, with Health Care Services leadership of FQHCs with a high volume of mental $ Medi-Cal payer mix — calculated by dividing clinic health visits, relative to their California peers, based Medi-Cal visits by clinic total visits (data from 2017 on available data from the sources noted above. Annual Utilization Data file cited above) Participants included FQHC CFOs, CMOs, and mental health program directors and mental health providers. Call participants estimated that their clinic sites would increase the number of mental health visits by approx- imately 10% if same-day billing were available. They California Health Care Foundation www.chcf.org 2 indicated that this increase would be driven by fac- tors including (1) patient convenience and desire for Scenario 1, Without Change in Scope same-day mental health visits, (2) a goal of reducing This scenario assumes that no change in scope would be no-shows caused by having to schedule patients for required for clinic sites to bill for same-day mental health mental health services at a later date, and (3) interest visits. (See Exhibit A.) in providing more mental health services to patients. These factors would be offset, according to the group, Total incremental visits billed to Medi-Cal were multi- by challenges in recruiting additional mental health plied by the November 2018 PPS rate for each site to providers and the reluctance of some patients to stay calculate additional incremental Medi-Cal revenue for for a second visit on the same day. the site. These amounts were summed to estimate the incremental increased reimbursement cost to the state. A Existing unbilled same-day mental health visits. Mental health visits already being provided on the same day as other visits but not currently billed to Scenario 2, with Change in Scope Medi-Cal because of the same-day billing restriction This scenario assumes that a change in scope would be were estimated at 8% annually per clinic site. a requirement of same-day billing for mental health ser- vices. (See Exhibit B.) Like the estimate for new mental health visits, this 8% estimate is based on information collected on A A new estimated PPS rate was calculated for each the July 31, 2019, conference call described above. site, using this change-in-scope methodology. Though mental health visits provided on the same day The total cost at the site was divided by a total visit as other visits are reported in the OSPHD encounter estimate that includes 10% in new mental health data, they are not billed for. The call group estimated visits, reflecting the fact that one goal of requiring a their unbilled mental health service volume at 10% of change in scope would be to capture these visits in current mental health visits billed to Medi-Cal; this was the denominator of a rate calculation. However, for decreased to 8% to reflect the fact that the volume of purposes of this calculation the total visit estimate mental health visits at most clinic sites is lower than at does not include the additional 8% existing unbilled the informant organizations. same-day visits, as these visits would already have been captured in OSHPD reported encounters. A Total incremental mental health visits. Existing unbilled same-day mental health visits (at 8%) were The resulting estimated cost per visit was reduced by added to new mental health visits (at 10%) and then 9% to account for costs that may have been included multiplied by Medi-Cal payer mix to calculate total on the OSHPD report but that may not be allowable incremental mental health visits billed to Medi-Cal for on a Medi-Cal cost report, or that may be considered each clinic site. non-reimbursable costs on the FQHC rate-setting cost report,1 and thus not included in the PPS rate. A Neither scenario estimates any additional administra- This 9% reduction also accounts for potential cost tive costs to the state. disallowances by the state’s Audits & Investigations department during the change-in-scope process. These disallowances are projected based on the author’s prior experience with the change-in-scope process. 1. Worksheet 1, line 59, in DHCS 3090: Medi-Cal Freestanding – PPS Rate Setting Cost Report, DHCS, January 2016, www.dhcs.ca.gov. Same-Day Billing for Medical and Mental Health Services at FQHCs: Estimating the Fiscal Impact www.chcf.org 3 The estimated cost per visit with 9% disallowance was compared to the current site PPS rate. If the estimated Discussion cost per visit with the disallowance exceeded the PPS These findings estimate that requiring FQHCs to sub- rate, the PPS rate was adjusted upward by 80%. This mit a change in scope to bill for same-day mental health reflects the fact that, when calculating the revised PPS visits for Medi-Cal beneficiaries could increase costs to rate, the state will allow 80% of the increased cost to the state by $231,700,000 with an estimated increase be added to the existing PPS rate. of 26,000 in new mental health visits. Alternatively, if FQHCs were not required to submit a change in scope New estimated PPS rates were capped at $350, even to bill for same-day mental health visits, the cost estimate where the existing PPS rate plus 80% of incremental decreases dramatically to $23,400,000, while the esti- cost exceeded that amount. Few FQHCs currently mated number of new mental health visits for Medi-Cal have PPS rates that exceed that amount. beneficiaries increases by 63,000. A Total incremental visits billed to Medi-Cal were These estimates are based on 2017 OSHPD data, and as multiplied by the new estimated PPS rates for each such, adjustments would need to be made to develop site to calculate additional incremental Medi-Cal bill- estimates that represent increases in mental health visit ing for that site. This figure was compared to existing volume from 2017 to 2019. The estimated increases in Medi-Cal revenue for the site. volume of 10% and 8% were developed based on the If the estimated increased revenue were negative or author’s experience with the change-in-scope process less than 5%, it was assumed that the FQHC would not with feedback from a small group of advisors who are elect to go through the change-in-scope process for not necessarily representative of feedback from the the site, and thus would not bill for same-day mental broader field. While the estimates could be impacted by health services. these two caveats, it is unlikely that the overall findings would change. Namely, the impact on access is likely If the increased revenue were greater than 5%, it was to be lower and the cost higher if there were a require- assumed that the FQHC would elect the change-in- ment for FQHCs to submit a change in scope to bill for scope process for that site. same-day mental health visits for Medi-Cal beneficiaries. These findings do not account for environmental factors that could impact mental health access and payment, including changes to the overarching FQHC payment methodology or dramatic changes in the mental health workforce. It is notable, however, that with the current payment structure, mental health access for Medi-Cal beneficiaries is restrained by the fact that FQHC provid- ers cannot bill for same-day visits. California Health Care Foundation www.chcf.org 4 About the Author This analysis was prepared for the California Health Care Foundation by Curt Degenfelder Consulting. Curt Degenfelder is a nationally recognized health care busi- ness consultant with more than 31 years of experience developing successful financial, operational and strategic solutions for hundreds of community health centers. About the Foundation The California Health Care Foundation is dedicated to advancing meaningful, measurable improvements in the way the health care delivery system provides care to the people of California, particularly those with low incomes and those whose needs are not well served by the status quo. We work to ensure that people have access to the care they need, when they need it, at a price they can afford. CHCF informs policymakers and industry leaders, invests in ideas and innovations, and connects with changemak- ers to create a more responsive, patient-centered health care system. For more information, visit www.chcf.org. Same-Day Billing for Medical and Mental Health Services at FQHCs: Estimating the Fiscal Impact www.chcf.org 5