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Pediatric Centers Argue Retroactive Payments Don’t Make Sense

California’s 14 pediatric day health centers are a form of home health agency serving a 21-and-under population. Those are two groups exempted from the state’s 10% Medi-Cal provider rate reductions in June.

PDHC operators assumed they were exempt from that rate reduction. That notion was reinforced by the absence of PDHCs on the list of providers in the state plan amendment (SPA) that the state sent to CMS for approval of the rate decrease.

Officials at the Department of Health Care Services, when alerted about the discrepancy, recently decided that, yes, PDHCs should be exempt from that rate decrease. This was great news for the PDHCs, which operate on a tight and limited budget — except for one thing.

DHCS officials now say the pediatric facilities have to pay the 10% difference for all of those months during which the status of PDHCs was in question.

That’s 10 months’ worth of cash PDHCs don’t have, according to Terry Racciato, president of two Together We Grow pediatric day health centers in San Diego.

“We were never included in the SPA request or [the CMS] approval,” Racciato said. “In our case, they never had CMS approval, and we are not on the list for the cut.”

Racciato’s contention is that the PDHCs are exempt because the rate cut could close pediatric centers and limit access. And if that’s the case, then that status should be the same on June 1 of last year as it is now.

The state disagrees.

“Federal approval of another SPA is necessary to exempt PDHCs from the payment reduction,” Norman Williams of DHCS wrote in an email. “The earliest DHCS can implement the exemption would be April 1, 2012, which will be the retroactive date.”

But according to Stan Rosenstein, a consultant working with the PDHCs and the former chief deputy director of Medicaid services for DHCS, if the pediatric day health facilities were never on the state plan amendment that was submitted to CMS, then there is no need to resubmit anything.

“If you look at the federal approval list, at the supplement that lists all the providers that are approved for this provider rate cut, pediatric day care is not on the list,” Rosenstein said. “So there’s no reason to go back to CMS. There’s nothing to amend.”

The principle of not limiting access is clear, he said. There’s a good reason home health agencies and pediatric care were exempted, because of possible access problems with that population, and the same notion applies to PDHCs.

“If you’ve concluded there’s an access problem, that would apply back to June 1,” Rosenstein said. “If you’ve already made exceptions for home health agencies, what’s the logic of this? Why the difference here? It would seem that consistency would be important.”

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