C.A. Upholds Limits on Medi-Cal Mental Health Payments

Friday, May 3, 2013

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C.A. Upholds Limits on Medi-Cal Mental Health Payments

By a MetNews Staff Writer

A state regulation that prohibits Medi-Cal from paying for more than two visits per month by an outpatient to a community mental health clinic does not violate the federal Medicaid Act, the Third District Court of Appeal ruled yesterday.

The panel overturned a Sacramento Superior Court judge’s ruling in favor of the Mendocino Community Health Clinic and affiliated clinics, which contended that as a “federally-qualified health center” under the act, it was entitled to payment for all necessary treatment rendered to its Medi-Cal patients.

State law provides that Medi-Cal, which implements the federal act, will cover outpatient psychological services “subject to utilization controls.” After the two-visit-per-month regulation was adopted, and Medi-Cal told the Mendocino clinics it would not reimburse them for more visits than that for fiscal years 2003-2004 and 2004-2005, the clinics sought administrative review.

The clinics argued that the regulation limiting payment was intended to address overbilling by individual practitioners, not by federally-qualified health centers, or FQHCs, which have a special status under the Medicaid Act. They also argued that they provide “core services” that must be paid for by Medi-Cal under federal law.

The administrative law judge concluded that FQHCs were subject to the reimbursement limit because there was no express federal exemption. The Department of Health Care Services agreed, but Superior Court Judge Michael P. Kenny granted the clinics’ petition for writ of administrative mandate.

Kenny reasoned that the federal act preempts the application of the regulation to psychology services provided by FQHCs because they are core services, and that the regulation exceeded the department’s authority under state law because the Legislature has not seen fit to subject such services to utilization controls.

Justice George Nicholson, however, in his opinion for the Court of Appeal, said the trial judge was wrong on both points.

The clinics and the trial judge, Nicholson wrote, were wrong to conclude that federal law, in requiring full reimbursement for core services provided by FQHCs, precludes states from enacting utilization controls. The law does require 100 percent reimbursement for the costs of each reimbursable visit, the justice explained, but does not preclude states from limiting the number of such visits.

He distinguished Three Lower Counties Community Health Services, Inc. v. State of Maryland (4th Cir. 2007) 498 F.3d 294, which rejected the state’s methodology for calculating reimbursements for certain services because it resulted in less than full payment for services rendered. “The question of whether services may be limited was not considered,” he wrote. “It therefore is not authority for the proposition that California cannot impose utilization controls on psychology services rendered at FQHC’s.”

Nicholson went on to say:

“The norm is that states can impose utilization controls to manage Medicaid funds, so we will not impute to Congress an intent to have the states pay for unlimited psychology services rendered to Medicaid patients by FQHC’s without evidence that Congress so intended.”

Nor, he wrote, can an intent to exempt FQHCs from the two-visit rule be presumed from the absence of legislation specifically subjecting them to the utilization controls imposed on other providers.

The case is Mendocino Community Health Clinic v. State Department of Health Care Services, 13 S.O.S. 2237.