What Does Medi-Cal Fee-for-Service Mean?

Medi-Cal, California’s Medicaid program, provides healthcare services to eligible low-income individuals and families. Within this extensive system, different models exist for delivering and paying for medical care. One such model is Medi-Cal Fee-for-Service, which represents a traditional approach to healthcare reimbursement. This system allows beneficiaries to access necessary medical services directly, with providers billing the state for each service rendered.

Defining Medi-Cal Fee-for-Service

Fee-for-service (FFS) is a payment model in healthcare where providers receive a distinct payment for each medical service they provide. This means that for every doctor’s visit, laboratory test, procedure, or other healthcare service, a separate fee is generated and billed. This approach contrasts with alternative payment structures, such as bundled payments or capitated arrangements, where providers receive a fixed amount regardless of the volume of services provided.

In the context of Medi-Cal, the Fee-for-Service model, often referred to as “Regular” Medi-Cal, involves healthcare providers billing the state directly for the covered services rendered to eligible beneficiaries. When a provider delivers care, they submit a claim to the Medi-Cal program’s fiscal intermediary, which then processes and pays the claim. It incentivizes providers to offer a wide range of treatments, as their revenue is directly linked to the number and type of services they deliver. The fee for each service is established by Medi-Cal, and providers are reimbursed according to these set rates, which are publicly available from the California Department of Health Care Services (DHCS).

The Fee-for-Service structure allows for clear itemization of medical actions, providing transparency in billing for both the patient and the payer. For example, a patient’s treatment might involve a consultation, followed by specific tests like X-rays or blood work, and then a particular procedure; each of these components would have a corresponding fee.

Accessing Care Under Fee-for-Service

Beneficiaries enrolled in Medi-Cal Fee-for-Service generally experience a broad choice of providers. They can typically seek care from any healthcare provider, including physicians, hospitals, and specialists, who accept Medi-Cal Fee-for-Service patients. This open access allows individuals to select their preferred providers without being restricted to a specific network, which is common in managed care plans.

For certain treatments or procedures, Medi-Cal may require prior authorization before services can be rendered. This process involves the healthcare provider submitting a request to Medi-Cal for approval of the proposed service, ensuring medical necessity and appropriateness.

A notable aspect of Medi-Cal Fee-for-Service is the absence of out-of-pocket costs for covered services. This structure aims to eliminate financial barriers to accessing necessary healthcare, ensuring that eligible individuals can obtain services without concerns about immediate costs at the point of care.

Prescription medications are also covered under the Fee-for-Service model, with Medi-Cal Rx overseeing pharmacy benefits for most beneficiaries. Additionally, many ancillary services, such as dental care, are often provided through the Fee-for-Service model, specifically via the Medi-Cal Dental Program.

Beyond traditional in-person visits, telehealth services are also covered and reimbursed under Medi-Cal Fee-for-Service. Providers can bill for services delivered via synchronous audio-visual or audio-only telecommunications systems, with reimbursement rates generally mirroring those for in-person services. This flexibility allows beneficiaries to access care remotely, which can be particularly beneficial for those in rural areas or with mobility challenges.

Populations Covered by Fee-for-Service

While Medi-Cal has increasingly transitioned beneficiaries into managed care plans, certain populations continue to receive their benefits, either fully or partially, through the Fee-for-Service model.

Dually Eligible Individuals

One significant group includes individuals who are dually eligible for both Medicare and Medi-Cal. Although a large portion of dual eligibles transitioned to Medi-Cal managed care starting in January 2023, they often continue to receive their Medicare benefits, including physician services, under Medicare’s Fee-for-Service model. For these beneficiaries, Medi-Cal acts as a secondary payer, covering Medicare cost-sharing, with providers billing the Medi-Cal plan for these “crossover claims.”

Native Americans

Another population often covered by Fee-for-Service are Native Americans who receive healthcare through tribal facilities. Medi-Cal provides comprehensive coverage for American Indians and Alaska Natives through both Fee-for-Service and managed care delivery systems. These beneficiaries can access care from any eligible Tribal Health Program or urban Indian Health program, and certain services provided at tribal clinics may qualify for 100% federal reimbursement.

Long-Term Care Recipients

Beneficiaries receiving long-term care in institutional settings also frequently utilize the Fee-for-Service model. Medi-Cal covers nursing home care and other long-term services for eligible individuals. While there has been a phased transition to managed care for institutional long-term care under the CalAIM initiative, Fee-for-Service remains a pathway for some beneficiaries in these settings.

Individuals with Complex Medical Conditions

Individuals with specific complex medical conditions may also be exempt from mandatory managed care enrollment and remain in Fee-for-Service. This can include patients with advanced pregnancy, cancer, renal disease requiring dialysis, or those who are HIV positive. A medical exemption, typically valid for up to 12 months and renewable, can be requested if changing providers would pose a risk to their health.

Carved-Out Services

Furthermore, certain services are “carved out” from managed care plans and are always delivered through the Fee-for-Service model, regardless of the beneficiary’s primary enrollment. These “carved-out” benefits include most dental services, some specialty mental health services, and substance use disorder treatment. In-Home Supportive Services (IHSS) were also transitioned to Fee-for-Service as of January 1, 2018.

Differentiating from Managed Care

Medi-Cal Fee-for-Service stands in contrast to Medi-Cal Managed Care, which is the predominant healthcare delivery model for most beneficiaries in California. The shift towards managed care has been significant, with nearly 90% of Medi-Cal beneficiaries now enrolled in such plans.

Provider Choice

Under the Fee-for-Service model, beneficiaries generally have a broader selection of providers, as they can seek care from any healthcare professional or facility that accepts Medi-Cal Fee-for-Service. This contrasts with managed care, where beneficiaries are typically limited to a more restricted network of providers contracted with their specific health plan.

Primary Care Physician (PCP) and Referrals

The role of a primary care physician (PCP) and referrals also differs significantly. In managed care plans, a PCP often acts as a gatekeeper, coordinating all care and typically requiring referrals for specialist visits. Fee-for-Service, conversely, generally allows for more direct access to specialists without the need for a PCP referral, offering greater flexibility for beneficiaries to seek specialized care directly.

Care Coordination

Care coordination mechanisms also vary between the models. Managed care plans are designed to emphasize integrated care coordination, aiming to streamline services and improve health outcomes through organized networks and specific programs. Fee-for-Service, by its nature, does not inherently provide this level of centralized care coordination, although beneficiaries can still receive comprehensive services.

Payment Structure

The fundamental payment structure is another key differentiator. Fee-for-Service involves providers billing the state for each individual service rendered, where reimbursement is tied to the volume of care provided. Managed care plans, however, operate on a capitated payment system, receiving a fixed per-member, per-month fee from the state to cover all the healthcare needs of their enrolled beneficiaries, regardless of the services utilized.

Most Medi-Cal beneficiaries are required to enroll in a managed care plan unless they fall into a specific exempted category, such as those with certain complex medical conditions or Native Americans receiving care through tribal facilities. New Medi-Cal beneficiaries are typically assigned to a managed care plan if they do not select one.