CA Welf & Inst Code Section 14138.17

(a)

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, for the duration of the APM pilot project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code.

(b)

The payment adjustment structure shall be applicable on a site-specific basis.

(c)

The payment adjustment structure shall permit an aggregate adjustment to the payments received 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 Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters 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.

(d)

An adjustment pursuant to this section shall occur no more than once per year per participating FQHC’s site during the APM pilot project and shall be subject to approval by the department.

(1)

An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections by more than 5 percent for the first year, 712 percent for the second year, and 10 percent for the third year. If the trigger level is reached in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and 105 percent of projected utilization for the first year, the difference between actual utilization and 10712 percent of projected utilization for the second year, and the difference between actual utilization and 110 percent of projected utilization for the third year. The payment adjustment in each instance shall be calculated as follows:

(A)

The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.

(B)

The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.

(C)

The amount in subparagraph (B) shall be adjusted to reflect the applicable comparison utilization for the year as follows:

(i)

Multiplied by 1.05 for year one.

(ii)

Multiplied by 1.075 for year two. (iii)Multiplied by 1.1 for year three.

(D)

The amount in subparagraph (C) shall be subtracted from the amount in subparagraph (A).

(E)

The amount in subparagraph (D) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.

(2)

(A)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 30 percent of projected utilization. If an FQHC site’s actual utilization is at a level that is more than 30 percent lower than the projected utilization, the department shall review, in consultation with the principal health plan, or subcontracting payer, as applicable, the FQHC site’s relevant data to identify the cause or causes of the difference, including, but not limited to, its volume of alternative encounters. If the department is able to determine that all or part of the lower than expected utilization was due to objective factors developed by the department in consultation with the principal health plans and FQHCs that are related to delivery system transformation and enhancements, such as alternative encounters, the department shall allow the participating FQHC site to retain all or a portion of the payments attributable to the utilization decrease that exceeds 30 percent lower than the projected utilization. If the department is unable to determine that all or a portion of the utilization decrease in excess of 30 percent was related to delivery system transformation and enhancements according to the objective criteria developed pursuant to this subparagraph, the participating FQHC site shall be required to refund the applicable payment amount to the principal health plan or subcontracting payer pursuant to subparagraph (B).

(B)

The total amount refunded by the participating FQHC site to the principal health plan or subcontracting payer shall be limited to an amount calculated as follows:

(i)

The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.

(ii)

The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined and multiplied by 70 percent. (iii)The amount in clause (i) shall be subtracted from the amount in clause (ii).

(iv)

The amount in clause (iii) shall be multiplied by the participating FQHC site’s per-visit rate that was determined pursuant to Section 14132.100, yielding the maximum amount of the refund to be made by the participating FQHC site. The refund shall be paid in one aggregate payment.

(C)

Any adjustment made pursuant to this paragraph shall be requested by a principal health plan, subcontracting payer, or FQHC, no later than 90 days after that determination by the department pursuant to subparagraph (A).