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From Health Law Daily, May 3, 2013

Federal law did not prohibit application of California’s two-visit rule to psychology services provided by an FQHC

By Geri Szuberla, JD, LLM

The Mendocino Community Health Clinic and other related clinics (Mendocino Clinics) were not eligible for Medi-Cal payment for more than two visits per month per patient for psychology services under state law, and the state law did not conflict with Medicaid law (Mendocino Community Health Clinic v State Department of Health Care Services, May 2, 2013, Nicholson, J). The Mendocino Clinics were federally qualified health centers (FQHCs) that provide outpatient clinic psychology services in addition to other “core” FQHC services. The statute that codified California’s payment system for FQHCs did not refer to outpatient psychology services except to say that a face-to-face encounter with a psychologist or social worker is a “visit” for the purpose of Medi-Cal payment to the FQHC. A Medi-Cal provider manual does specify that Medi-Cal Service limitations (two services per month) apply when rendered in an FQHC. The appellate court held that neither the federal Medicaid statute nor the 4th Circuit case cited by the Mendocino Clinics addresses state utilization controls. They also do not prohibit application of state utilization controls, the court held.

History of the case. A state trial court had granted the Mendocino Clinics petition for review of an administrative law judge (ALJ) decision that the Mendocino Clinics did not show that federal law was intended to supplant state Medi-Cal limitations on payments to FQHCs. The trial court reversed the ALJ decision, concluding that the two-visit utilization control found in the California Code of Regulations cannot be applied to psychology services rendered by an FQHC because (1) under federal law psychology services are core FQHC services for which the FQHC must be fully reimbursed and (2) even if federal law did not prohibit application of utilization controls to psychology services rendered by an FQHC, under state law the Legislature has not exercised its authority to impose utilization controls on those services.

Federal law. “Critical to the trial court’s holding and the Mendocino Clinics’ argument on appeal,” the appellate court said, “is that federal law concerning FQHCs requires states to provide full reimbursement to FQHCs for core services.” “Full reimbursement, however, does not preclude utilization controls,” the court held. The specific federal statute cited by the Mendocino Clinics, 42 U.S.C. 1396a(bb)(2), which requires states to pay “100 percent of the average of the costs of an FQHC, “simply does not address utilization controls,” the court said.

“That a state must fully reimburse an FQHC for services rendered does not necessarily mean that the state cannot limit the services rendered,” the court said. Federal law does not provide authority for the proposition that the state Department of Health Services cannot impose utilization controls on FQHCs, the court concluded.

State law. The trial court found, and the Mendocino Clinics argued on appeal, that California has not actually adopted utilization controls with respect to FQHCs. “To the contrary, the appellate court said, “state law limits outpatient clinic psychology services, even those provided by an FQHC, to two visits per month.” The schedule of Medi-Cal benefits in the state law is “subject to utilization limits,” according to subparagraph (a) of Welfare and Institutions Code sec. 14132.100. Code sec. 14133 permits controls to be imposed on the benefits provided in sec. 14132, the court said, including limitation on the number of services within a specified time frame, the court found. Those statutes, the court said, provide the authority for the regulation at 22 Cal. Code Regs. sec. 51304 that limits services listed in sec. 14132 to two visits per month per patient.

Statutory interpretation. The absence of reference to utilization controls in the state statutes concerning FQHCs could have resulted from the Legislature’s view that, because the FQHCs are rendering outpatient clinic services, they are subject to the already existing statutes and regulations concerning utilization controls applicable to outpatient clinics. That was the view of the state Medi-Cal agency, and the court agreed.

The case number is C067826.

Attorneys: Douglas S. Cumming (Law Offices of Douglas S. Cumming) for California Department of Health Care Services, Mendocino Community Health Clinic, Mendocino Community Health Clinic-Hillside Clinic, Mendocino Community Health Clinic-Lakeside, Mendocino Community Health Clinic-Little Lake Clinic. Kamala D. Harris (California Office of the Attorney General) for California Department of Health Care Services.

Companies: California Department of Health Care Services; Mendocino Community Health Clinic; Mendocino Community Health Clinic-Hillside Clinic; Mendocino Community Health Clinic-Lakeside; Mendocino Community Health Clinic-Little Lake Clinic

MainStory: TopStory MedicaidPaymentNews PreemptionNews CaliforniaNews

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