Health Center Rate Audits: Preliminary Survey Analysis
In August CPCA’s PPS Technical Advisory Committee led an effort to source data on the health center rate-setting and change in scope processes, with the goal of identifying any patterns in the audit data and developing best practices to help health centers in effectively navigating the rate setting and change processes. We received audit reports from health centers around the state, providing data from 45 health center rate change and rate setting submissions and audits. The data has already yielded many insights, primarily that there are clear areas of improvement needed from both health centers and our partners at DHCS who administer the Medi-Cal program and oversee the setting and changing of PPS rates.
The data showed that adherence to Medicare cost principles, one of the primary sources guiding whether a cost is allowed to be counted within the PPS rate or not, and to what degree, was inconsistent from audit to audit. There is currently no single guiding source for how costs are to be treated within PPS rates, and this is contributing to a high level of ambiguity in how costs should be documented and audited. The data also showed many documented health center costs being disallowed, and that the citations required to be provided as the basis for these disallowances were often vague or otherwise did not clearly support the costs being disallowed. These findings highlight the need to provide guidance and structure to support accuracy and efficiency in the Medi-Cal rate setting and rate change processes for health centers.
Next steps in this area include ongoing legal analysis of the audit data and findings to better understand and recommend areas of improvement to DHCS. Additionally, CPCA and the PPS TAC will look for opportunities to define and share best practices in areas like costs documentation and tracking, including through educational opportunities like CPCA’s Financial Conference, with the goal of improving both the rate audit process and outcomes and enhancing overall health center financial sustainability.
Medi-Cal pays health centers through a cost-based reimbursement rate called PPS. PPS rates are unique to each health center and are set and changed through rate-setting and change in scope processes. These processes include health centers submitting their cost data for review and audit to determine the health center site’s initial PPS payment rate or, for existing rates, to determine a rate change. For the rate change process this also includes a reduction in the overall increase from former to new rate. Given the static nature of PPS reimbursement in comparison with real-time costs for delivering care, it is imperative that health centers can fully include their costs within their PPS rate; though even then, it is a lagging marker behind current costs.
