Financial Review Outpatient and Behavioral Health Division
Financial Review Outpatient and Behavioral Health Division (FROBHD) conducts financial and compliance reviews and audits of Medi-Cal and other DHCS programs’ outpatient and behavioral health providers, including Federally Qualified Health Centers, Rural Health Clinics, Local Educational Agency, Targeted Case Management, Ground Emergency Medical Transportation, Specialty Mental Health, Substance Abuse Prevention and Treatment Block Grant, and Drug Medi-Cal Organized Delivery System. These reviews verify payments to providers and their reported costs are valid, accurate and in compliance with governing laws, regulations, and program intent.Audited data is also provided to assist with provider rate setting purposes.
Provider Descriptions
Outpatient and behavioral health providers typically provide health care services to members that do not require an overnight stay. The following provider types are currently reviewed by FROBHD:
- Cost-Based Reimbursed Clinics (CBRC)
- Drug Medi-Cal Organization Delivery System (DMC-ODS)
- Federally Qualified Health Centers (FQHC)/Rural Health Clinics (RHC)
- Ground Emergency Medical Transportation (GEMT)
- Indian Health Program (IHP)
- Local Educational Agency (LEA) Medi-Cal Billing Option Program (LEA-BOP)
- Mental Health Services Act (MHSA)
- Specialty Mental Health Services (SMHS)
- Substance Abuse Prevention and Treatment Block Grant (SABG)
- Targeted Case Management (TCM)
Cost-Based Reimbursed Clinics (CBRC)
The Department reimburses the CBRCs, owned or operated by Los Angeles County, at 100% of reasonable and allowable costs. The Department pays an interim rate to the clinics, which is adjusted by FROBHD once the audit reports are finalized. The adjusted interim rate is used for subsequent fiscal year claims.
Drug Medi-Cal Organization Delivery System (DMC-ODS)
FROBHD conducts Drug Medi-Cal Organized Delivery System (DMC-ODS) cost report audits to provide reasonable assurance that reported costs are allowable. This review includes risk analysis and determining final cost settlement amounts by 1) accepting interim settlement amounts based on risk analysis when appropriate, 2) auditing cost reports for compliance with federal reasonable and allowable cost principles contained in Centers for Medicare & Medicaid Services (CMS) Pub. 15-1, Code of Federal Regulations (CFR), Title 42, Sections 413.5 and 413.20, and Title 22, California Code of Regulations (CCR), Section 51341.1, contracts and program letters, and 3) confirming final settlements of allowable costs do not exceed Certified Public Expenditures (CPEs). Effective July 1, 2023, California Advancing and Innovating Medi-Cal (CalAIM) payment reform plans to end cost-based reimbursement and transition DMC reimbursement to fee-for-service payments to county behavioral health (BH) plans, transition to intergovernmental transfers (IGTs) to finance Medi-Cal county BH plan payments, and implement current procedural terminology (CPT) coding transition resulting in reduced administrative and audit functions.
Federally Qualified Health Centers (FQHC)/Rural Health Clinics (RHC)
FROBHD conducts rate setting cost report and Change in Scope of Service Request (CSOSR) audits to ensure the Prospective Payment System (PPS) rate is established based on reasonable and allowable cost for FQHC/RHC covered benefits in accordance with federal and state regulations and statutes.
At the end of each fiscal period, FQHC/RHC providers are required to file a Reconciliation Request form which finalizes reimbursements based on a PPS rate. Part of the audit process consists of a review of reported third-party payments, a reconciliation of Medi-Cal visits and payments to the Medi-Cal fiscal intermediary payment data, and billing reviews.
FQHCs and RHCs serve as primary care providers for the underserved Medi-Cal beneficiary population. FQHCs include clinics that meet the federal requirement to receive grants under Public Health Service Act Section 330 for providing primary care services. The RHC program is intended to increase primary care services for Medicare and Medicaid beneficiaries in rural areas. FQHCs/RHCs are paid under a PPS which is an all-inclusive rate per visit encompassing its total costs. Initial PPS rates are clinic specific and are established using one of two methods: three comparable clinics or via a rate setting cost report. DHCS determines the FQHC/RHC’s initial PPS rate by evaluating three comparable clinics or auditing the cost reports in accordance with federal and state laws and regulations. Once the PPS rate is established, it becomes the base rate and is subject to an annual increase computed based on a federally stipulated Medicare Economic Index (MEI) inflationary factor. The PPS rate may be rebased via a CSOSR if a clinic experiences a significant change in the services provided and meets the requirements in California statute. In such cases, a PPS rate may be modified to reflect the additional cost and related visits for services not reflected in the original PPS rate.
FQHC/RHC services rendered to Medi-Cal beneficiaries that are enrolled in Medicare and/or Medi-Cal Managed Care are reimbursed at a differential rate for eligible Medi-Cal visits. The differential rate is based on information supplied by the provider and approximates the difference between the provider’s average third party payments and the provider’s current PPS rate known as the wrap around payment. The adjudicated wrap visits are reconciled annually at the end of the provider's fiscal year end to ensure each visit was paid no more or less than the PPS rate.
FROBHD conducts audits of the GEMT cost reports to provide reasonable assurance that payments made to GEMT providers do not exceed actual costs and that the GEMTs are utilizing qualified local funding to meet its CPE requirements.
GEMT is a supplemental reimbursement program that provides additional funding to eligible governmental entities that provide GEMT services to Medi-Cal Fee-For-Service beneficiaries. The supplemental reimbursement payments are based on the uncompensated costs for providing Medi-Cal Fee-For-Service transports to Medi-Cal beneficiaries. GEMT reimbursement is based on claiming the FFP on CPEs that have been incurred by the public provider. No State General Fund expenses are incurred for this program. CMS requires GEMT providers to submit end-of-year cost report reconciliations.
Indian Health Program (IHP)
At the end of each fiscal period, Indian Health providers are required to file a Reconciliation Request form which finalizes reimbursements based on the federal all-inclusive rate (AIR) for dual eligible beneficiaries (Medicare/Medi-Cal). Part of the audit process consists of a review of reported third-party payments, a reconciliation of Medi-Cal visits and payments to the Medi-Cal Fiscal Intermediary payment data and/or managed care plan data and billing reviews.
IHP is an effort to improve the health status of American Indians living in urban, rural, and reservation or rancheria communities throughout California. Health services for American Indians are based on a special historical legal responsibility identified in treaties with the U.S. government. CMS allows Indian Health Care Providers operating under the authority of the Tribal Indian Self-Determination and Education Assistance Act to participate in Medi-Cal as one of several clinic provider types including, but not limited to, Indian Health Services Memorandum of Agreement (IHS-MOA) clinic, FQHC, Tribal FQHC, or community clinic.
Local Educational Agency Medi-Cal Billing Option Program (LEA BOP)
FROBHD conducts financial audits to determine the final cost settlement of the Cost and Reimbursement Comparison Schedule (CRCS), or cost report. When the final settlement is not completed within 12 months of the CRCS (March 1) due date, an interim settlement is completed. All the CRCSs require an initial minimal desk audit that includes reconciliation of the interim reimbursement and various program approved rates reported. The minimal audit is then analyzed to determine the audit risk and the level of the final audit type to be performed (minimal, limited, or field audit).
LEAs provide the federal share of reimbursement for health assessment and treatment for Medi-Cal eligible children within the school setting (school-based services). LEAs (school districts or county offices of education, charter schools, community college districts, California State Universities, and University of California campuses) employ or contract with qualified medical practitioners to render LEA healthcare-related services. The LEA program is a CPE program funded by federal and local funds established under the State Plan Amendment (SPA). LEAs incur 100% of costs for services provided and are reimbursed the maximum federal reimbursement. No State General Fund expenses are incurred for this program. CMS requires end-of-year cost report reconciliations and audits to provide reasonable assurance that payments made do not exceed actual costs and that the LEAs are providing qualified local funding to meet its CPE requirements. The CRCS is the reporting mechanism used by LEA providers to submit the required data for final cost settlement. LEAs register with Local Governmental Financing Division (LGFD) and file cost reports with FROBHD for audit.
Mental Health Services Act (MHSA)
FROBHD conducts audits to determine compliance with MHSA fiscal requirements including: MHSA funds accounting and investment requirements, reported expenditures as compared to the approved Three-Year Program and Expenditure Plan and updates, and compliance with Non-Supplant and Prudent Reserve requirements. The MHSA was enacted by California Proposition 63 in 2004 to expand mental health services in California.
Specialty Mental Health Services (SMHS)
FROBHD audits include risk analysis and determining final cost settlement amounts by 1) accepting interim settlement amounts based on risk analysis when appropriate, 2) auditing cost reports for compliance with federal reasonable and allowable cost principals contained in 42 CFR, Part 413 and CMS Pub. 15-1 and other federal and state laws, regulations, contracts and program letters, and 3) confirming final settlements of allowable costs do not exceed CPEs. SMHS is carved-out of the broader Medi-Cal program, operating under a CMS-approved Section 1915(b) waiver of the Social Security Act. County Mental Health Plans (MHPs) are reimbursed FFP based on CPEs and submit annual cost reports for cost-based reimbursement for SMHS through June 30, 2023. Effective July 1, 2023, CalAIM payment reform plans to transition SMHS reimbursement to a reimbursement rate methodology using IGT, resulting in reduced administrative and audit functions.
Substance Abuse Prevention and Treatment Block Grant (SABG)
FROBHD conducts Substance Abuse Prevention and Treatment Block Grant (SABG) cost report audits of counties to determine that allocated costs to SABG were fair, equitable and allowable. This review includes risk analysis and determining final cost settlement amounts by 1) accepting interim settlement amounts based on risk analysis when appropriate, and 2) auditing cost reports for compliance with federal reasonable and allowable cost principles contained in Title 45 CFR Part 96 (45 CFR); U.S. Department of Health and Human Services Uniform Administrative Requirements, Cost Principles and 45 CFR Part 75.
The SABG program's objective is to help plan, implement, and evaluate activities that prevent and treat substance use disorders. Grantees use SABG for prevention, treatment, recovery support, and other services to supplement Medicaid, Medicare, and private insurance services. Mandated by Congress, the Substance Abuse and Mental Health Services Administration (SAMHSA) administers SABG’s noncompetitive, formula grant through SAMHSA’s Center for Substance Abuse Treatment Performance Partnership Branch, in collaboration with the Center for Substance Abuse Prevention Division of State Programs. The SABG program covers pregnant women and women with dependent children, intravenous substance abuse, tuberculosis services, and primary prevention services.
SABG Cost Report Forms: SABG Targeted Case Management (TCM)
FROBHD conducts end-of-year cost report reconciliations and audits of TCM cost reports to provide reasonable assurance that reimbursements do not exceed actual cost and CPE requirements are met.
The TCM program is an optional program funded by federal and local funds that provides comprehensive case management services to Medi-Cal eligible individuals within a specified target population to gain access to needed medical, social, educational, and other services. TCM services are provided by Local Governmental Agencies (LGAs) (counties and chartered cities) under contract with DHCS. The TCM program is a CPE program, and no General Fund expenses are incurred for this program. Under the current SPA, the reimbursement methodology is based on a cost per encounter and the interim reimbursement utilizes prior-year cost data. LGAs register with LGFD are required to file annual cost reports to the Cost Report Tracking Section (CRTS) of FROBHD.
Resources
Reporting Medi-Cal Fraud
Health Care Fraud is a Crime.
Contact Information
Financial Review Outpatient and Behavioral Health Division (FROBHD)
Department of Health Care Services
1500 Capitol Avenue, MS 2000
PO Box 997413
Sacramento, CA 95899-7413
Phone: (916) 440-7550
