Cal. Welf. & Inst. Code § 14138.17

(a) In order to ensure participating FQHCs have an incentive to manage visits and costs, while at the same time exercising a reasonable amount of flexibility to deliver care in the most efficient and quality driven manner, for the duration of the APM project the department shall, in accordance with this subdivision, establish a payment adjustment structure. The payment adjustment structure shall be developed with stakeholder input and shall meet the requirements of Section 1396a(bb)(6) of Title 42 of the United States Code and Part 438 (commencing with Section 438.1) of Subchapter C of Chapter IV of Title 42 of the Code of Federal Regulations.
(b) The payment adjustment structure shall be applicable on a site-specific basis.
(c) The payment adjustment structure shall permit an aggregate adjustment to the payments received when actual utilization of services for a participating FQHC’s site exceeds or falls below expectations that were reflected within the calculation of the rates developed pursuant to Sections 14138.14 and 14138.15. For purposes of this payment adjustment structure, both actual and expected utilization shall be expressed as the total number of traditional encounters that would be recognized pursuant to subdivision (h) of Section 14132.100 for the APM enrollees of the participating FQHC’s site across all APM aid categories and averaged on a per member per year basis.
(d) An adjustment pursuant to this section shall occur no more than once per year per participating FQHC’s site during the APM project, and shall be requested within 90 days of the close of the rating period, except when additional time is permitted by the department. All adjustments shall be subject to approval by the department.
1. (1) An adjustment to payments in the case of higher than expected utilization shall be triggered when utilization exceeds projections in any year. If an adjustment is required in a given year, the participating FQHC site shall receive an aggregate payment adjustment from the principal health plan or applicable subcontracting payer that is based upon the difference between its actual utilization for the year and the projected utilization for the year. The payment adjustment in each instance shall be calculated as follows:
  1. (A) The actual total utilization, expressed as traditional encounters, for the actual APM enrollees for the applicable year shall be determined.
  2. (B) The projected total utilization contained in the clinic-specific PMPMs for the actual APM enrollees for the applicable year shall be determined.
  3. (C) The amount in subparagraph (B) shall be subtracted from the amount in subparagraph (A).
  4. (D) The amount in subparagraph(C) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site. The payment adjustment shall be paid to the participating FQHC site by the principal health plan, or subcontracting payer, as applicable, in one aggregate payment.
2. (2) To incentivize care delivery in ways that may vary from traditional delivery of care, participating FQHCs shall have the flexibility to experience a lower than expected visit utilization of up to 30 percent of projected utilization. The department shall develop, with input from affected stakeholders, objective criteria to ensure minimum standards for access and quality. If an FQHC site does not meet those established quality and access standards, the participating FQHC shall be required to return a portion of PMPM revenue based on a formula developed by the department with input from affected stakeholders. A participating FQHC shall not receive revenue lower than the amount calculated as follows:
  1. (A) The actual total utilization, expressed as traditional encounters, for the applicable year shall be determined.
  2. (B) The amount in subparagraph (A) shall be multiplied by the per-visit rate that was determined pursuant to Section 14132.100 for the participating FQHC site yielding the payment adjustment for the participating FQHC site.
(e) Any adjustment made pursuant to this section may only be requested by a principal health plan, subcontracting payer, participating FQHC, or the department.