The Schwarzenegger Administration is proposing to dramatically reduce reimbursement rates to Federally Qualified Health Center (FQHC)/Rural Health Clinic (RHC) Adult Day Health Care (ADHC) centers. FQHC/RHC ADHCs are now subject to a rate reduction from an average Prospective Payment System (PPS) rate of $160.58 to a flat FFS Medi-Cal rate of $76.22.
FQHC/RHC ADHCs are reimbursed at enhanced PPS rates to more accurately reflect the cost of providing a medical home for medically complex, low-income individuals, including disabled adults 18 years of age and older, the elderly, and the uninsured. The FQHC/RHC ADHCs PPS reimbursement rates also reflect the higher level of required services resulting in a PPS cost range between $106 - $227 per visit, with the average rate for all twelve sites being $160.58.1 Currently, stand-alone ADHCs are reimbursed at the FFS Medi-Cal rate of $76.22 per visit, 2 which is an arbitrarily constructed rate. However, SB 1755 (Chesbro), passed in 2006, requires the establishment of a cost-based rate for ADHCs and the cost analysis is currently underway.
There are over 650 ADHCs in California; five FQHC ADHC providers operate eleven of the sites and one site is operated by an RHC. Combined, the FQHC/RHC ADHCs serve approximately 1,600 participants.
The Administration projects that all of the FQHC/RHC ADHCs will remain open and the savings generated from reducing their rates will be approximately $2.5 million annually. However, contrary to the Administration’s assertion, the proposal to dramatically reduce reimbursement rates to FQHC/RHC ADHCs will result in many of these facilities ceasing operations. The comprehensive, high quality, and integrated care provided at these health centers cannot be furnished at the reduced rate. The closure of these facilities will result in approximately 240 FQHC/RHC ADHC participants moving into Skilled Nursing Facilities (SNF) within three months. This move will cost the State an estimated $6.5 million ($13.4 million3 with the federal match) in the first year, a sum far greater than the anticipated $2.5 million ($5 million with the federal match) in cost savings estimated from aligning all ADHC rates.
The PPS reimbursement that FQHC/RHC ADHCs currently receive is warranted because they provide a comprehensive service to complex patients. Participants at FQHC/RHC ADHCs tend to be referred to the ADHC by the FQHC/RHC primary care provider because of the intricate nature of their case, which often times includes dementia, obesity, and other complicated medical conditions that require more one on one care. Furthermore, by federal mandate, FQHC/RHCs operate in the most underserved areas and serve the most underserved patients of the State. The comprehensive and preventive nature of their services results in significant government savings in overall medical and long term care costs.
In May 2001, the Davis Administration advanced a similar proposal as a cost containment measure. The proposal was later withdrawn. While no one can be certain why the proposal was withdrawn, at the time AltaMed Health Services Corporation, the largest FQHC ADHC in the state, had published an analysis of the different levels of services required of a FQHC ADHC as opposed to an ADHC and the analysis provided objective information as to the different level of services the two are required to offer, in turn explaining the different rate structures.
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1 Figure based on weighted average using clinics average daily attendance.
2 An ADHC visit constitutes a minimum of 4 hours per day.
3 Figure based on the 2007-08 California nursing home reimbursement rate of $152.48 /day.
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