Unfavorable Appellate Court Decision on 2-Visit Limit for Psychology Services in FQHCs

CPCA cautions FQHCs to now take into account utilization restrictions when billing psychology and psychiatry visits. Here’s the CPCA email, dated 5/9/13:


On May 2, the California Court of Appeal 3rd District (Sacramento) rendered an opinion in Mendocino Community Health Clinic v.  Department of Health Care Services that is unfavorable to FQHCs.  The key issue in the case is whether the Medi-Cal program may apply the two-visit per month visit limitation per beneficiary on psychology services when these services are provided by FQHCs.  The plaintiff argued that the utilization control on psychology services does not apply to FQHC services because under federal law the State is required to reimburse FQHCs based on 100% of their reasonable costs and on a per visit basis for FQHC core services and because the California Code section that established FQHC services as a Medi-Cal covered benefit does not impose utilization controls on FQHC services.  The Court of Appeal decision overturns the lower court’s finding that the utilization controls on psychology services does not apply to FQHCs because these are core FQHC services that must be fully reimbursed.

The Court of Appeal reasoned that the Medi-Cal program’s utilization controls on psychology services applies to FQHCs because 1) there is nothing in federal law that prevents the State from imposing utilization controls on FQHC services and 2) state law imposes utilization controls on outpatient psychology services.

In its decision, the Court criticized the plaintiff for reading too much into the statutes to support its case, yet the court wasted no effort in doing precisely the same thing to come to its conclusion.  The Court said “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.”  The Court also found no significance to the fact that the California statute does not explicitly impose utilization controls on FQHC services.  The Court said:  “… the absence of reference to utilization controls in the statute concerning FQHCs could just as easily result from the Legislature’s view that because the FQHCs are rendering outpatient services, they are subject to the already existing statutes and regulations concerning utilization controls applicable to outpatient clinics.”  Ultimately, the court found that because the California Code section that provides for FQHC reimbursement is found in the same chapter of the Code that imposes utilization controls on “outpatient clinic” psychology services, the utilization controls apply to psychology services provided by FQHCs.  With this faulty reasoning, the Court basically deferred to the Medi-Cal agency’s interpretation of the law.

The final disposition of the case is pending.  It is unknown at this time whether the plaintiff will appeal.

The decision affects all FQHCs that provide psychology services.  (The court did not address limits on psychiatry services, but based on the court’s reasoning about limitations on psychology services it would follow that, had the issue been before the Court,  the regulatory limit on psychiatry services would also apply to FQHC services.)

Pending final resolution of this case, CPCA continues to caution FQHCs not to bill for psychology and psychiatry visits that exceed the regulatory limits per beneficiary, as the Medi-Cal program will most likely disallow these excess visits unless there is an approved Treatment Authorization Request (TAR).  The catch is that the Department of Health Care Services has repeatedly maintained that there is no administrative process in place for FQHCs to seek TARs.  If you have specific questions about the case or how this decision will specifically impact your operations, CPCA advises you to contact your legal counsel.

Best regards,

Vanessa R. Saavedra
Assistant Director of Policy
California Primary Care Association
1231 I Street, Suite 400
Sacramento, CA 95814
W: (916) 440-8170
F: (916) 440-8172

Tags: Billing