On Feb. 5, CHA will distribute payment schedules to all Medi-Cal health plans and eligible hospitals for the 2019-21 Hospital Fee Program managed care pass-through cycle for July 1, 2019-Dec. 31, 2020. As previously shared in CHA News, these payment schedules will be associated with the fees collected by the Department of Health Care Service (DHCS) on Dec. 23, 2020, with a single invoice labeled as “MC1 PT” and “MC2 PT.”
Due to the risked nature of Medi-Cal managed care payments, the estimated payments will reflect approximately 99% of the modeled amount — on the higher end of previous estimates.
What to look out for
- On Feb. 5, every eligible hospital will receive a payment schedule from CHA. CHA will also distribute to the health plans a summarized payment file and a copy of the DHCS private hospital directed payment (PHDP) reconciliation report.
- Included on the payment schedule (see example at the bottom), there will be three columns:
- “MC PT Payment 7/1/19-12/31/20”— This column reflects the pass-through payment amounts by plan. In aggregate, the hospital can assume estimated amounts that reflect approximately 99% of the modeled amount.
- “DHCS PHDP Reconciliation”— This column reflects what are referred to as “negative variances” from the PHDP reconciliation between the health plans and hospitals. See more details about this below.
- “Net MC PT Payment 7/1/19-12/31/20”— This column reflects the net payment that hospitals can expect to receive from health plans.
What is DHCS PHDP reconciliation?
As shared previously in CHA News, in May 2020 DHCS reopened the contract status files for the state fiscal year (FY) 2017-18 PHDP phases. This allowed DHCS to reconcile over the summer FY 2017-18 PHDP Phase 1 and Phase 2 calculations, which were already paid in September 2019 and March 2020, and include the payment adjustments in the FY 2018-19 Phase 1 payment in August 2020.
Unfortunately, it is necessary to make a second PHDP reconciliation for FY 2017-18, and for the first time, FY 2018-19 Phase 1, in the FY 2018-19 Phase 2 payment expected to occur in March 2021. DHCS will share the final payment exhibits and detailed encounter files on Feb. 19. However, as DHCS discovered during its reconciliation process, there are over 300 instances where the FY 2017-18 and FY 2018-19 Phase 1 reconciliation amounts exceed the expected FY 2018-19 Phase 2 payment to the hospitals. In these situations, DHCS refers to them as “negative variances,” and the hospital and health plan will be expected to reconcile outside the FY 2018-19 Phase 2 payment.
In every “negative variance” situation, the hospital has a PHDP overpayment from the health plan. Therefore, CHA requested from DHCS the PHDP reconciliation amounts for FY 2018-19 PHDP Phase 2 ahead of time. To ease the burden on hospitals, CHA has incorporated these “negative variances” into this pass-through payment cycle. In some cases, the amount can be as little as $1. CHA encourages hospitals to review the final files on Feb. 19 when they are released by DHCS; however, it is important to note that the “negative variances” included in the payment schedules will have been addressed already through the pass-through cycle.