On January 1, 2024, the first phase of  Medi-Cal provider rate increases  took effect as a result of the 2023-24 budget deal. But, because implementing the rate increases required system and contract updates, health plans had been given additional time to start making the payments.

On June 20, 2024, the California Department of Health Care Services (DHCS) issued guidance in All Plan Letter (APL) 24-007 to Medi-Cal managed care plans on implementation of the 2024 Medi-Cal Targeted Rate Increase (TRI) Fee Schedule and the retroactive payments for claims with dates of service on or after January 1, 2024, that were already paid, but did not include the rate increases. 

Key provisions in the APL:

• While the rate increases are focused on primary care, obstetric and non-specialty mental health services, any eligible provider billing eligible CPT codes will receive the TRI, without regard to the rendering provider’s specialty.
• The TRI fee schedule does not apply to services billed or rendered by assistant surgeons.
• Managed care plans must ensure that eligible network providers receive no less than the applicable minimum fee schedule for qualifying services. For physicians reimbursed on a capitated basis, plans must ensure the network provider is reimbursed a minimum of equal to, or projected to be equal to, the TRI fee schedule for applicable services.
• The APL does not obligate plans that historically paid at a set percentage of the legacy Medi-Cal fee schedule to continue to pay the same percentage of the TRI fee schedule. Note, DHCS has retained the legacy Medi-Cal fee schedule rates on the main Medi-Cal rates website. TRI rates are indicated by procedure type “X.”
• Managed care plans and subcontractors must implement and make all retroactive payments to eligible network providers no later than December 31, 2024, except when payment would not otherwise be due by that date. Managed care plans that fail to meet this timeline may be subject to interest payments.
• Until plans have implemented and made the retroactive payments, they should continue to pay eligible network providers the Proposition 56 supplemental payments.
• Plans must have a formal procedure for appeals related to the retroactive payments and must communicate to how payments will be processed and how to identify the responsible payor (i.e., health plan or delegated group).
• Plans must provide in electronic format the detailed payment information corresponding to the payment made for each qualifying service to allow the network provider to reconcile the retroactive payments.

CMA worked closely with DHCS on the guidance and appreciates the clarity provided.

DHCS Webinar on Targeted Rate Increases

DHCS is hosting a provider webinar on July 17, 2024, from 3 to 4:30 p.m., to answer questions about the 2024 targeted provider rate increases. Questions should be sent in advance to DHCS at targetedrateincreases@dhcs.ca.gov no later than July 8. Advance registration is required. 

For more information about the targeted rate increases, see DHCS APL 24-007.

Contact: CMA Center for Economic Services,economicservices@cmadocs.org or (800) 786-4262