Last year, HPSM’s Commission approved specific investments to address critical access gaps and support our providers through provider rate increases. On April 1, 2025, HPSM increased its standard network rates for CareAdvantage, as well as Medi-Cal rates for physician services within primary care and specialty care. There will be other rate enhancements (for additional lines of business, services and provider types) in the year to come.
The rest of these rate increases will be phased in over the course of 2025. These rate increases will ensure compliance with the Department of Health Care Services (DHCS) payment methodology. This includes the elimination of Prop 56 payments for physician services and the adoption of site-of-service differential reimbursement. Please read below for more detail on what this means for our provider practices and for some context on HPSM’s approach.
Why is HPSM making these rate changes, and why now?
As part of HPSM’s five-year strategic plan, the health plan remains firmly committed to improving health outcomes, access and experience, and equity for members. Even (and perhaps especially) during times of uncertainty regarding the future for Medi-Cal, HPSM recognizes how critical it is to thoughtfully invest in the long-term sustainability of the provider network. Learn more about HPSM’s strategic plan.
In 2024, as part of our strategic plan roadmap, HPSM’s Commission approved over $130 million of specific investments to address critical access gaps and support contracted providers. Many providers have served HPSM’s membership for many years, and each plays a crucial role in sustaining the safety net of healthcare access for San Mateo County’s most underserved residents. Starting in April, HPSM is rolling out those commitments via a first phase of rate increases, which may positively impact providers’ practices.
What are the goals of these increases to network rates?
These investments broadly focus on bolstering primary care, specialty access, and addressing the areas of most significant disparity between California Medi-Cal rates and other sources of reimbursement. Additionally, HPSM aims to reduce some of the financial complexity involved with processing separate supplemental payments for our providers, and to increase funding stability in key access areas.
To do this, these network rate increases are aligned with broad California policy goals (such as DHCS’s Targeted Rate Increases), in many cases adopting these point-in-time rate increases as longer-term HPSM network rates. HPSM will be adjusting its standard network rates to reflect overall increases in prioritized areas, in tandem with the elimination of separate Proposition 56 payments for physician services. This will result in net reimbursement equal to or greater than the prior HPSM rates in addition to these supplemental payments. HPSM is also working to adopt greater consistency with Medicare and DHCS payment methodologies. For example: adopting site-of-service differential reimbursement methodology, and other standard payer practices for billing efficiency.
In total, these rate changes go beyond mandated regulatory requirements, to significantly invest in the areas of HPSM’s network where there are the most acute access needs for members.
What are the detailed changes to CareAdvantage rates?
HPSM’s current network rates under most CareAdvantage agreements are structured as 100% of Medicare, except for services that typically have a Medicare “share of cost” obligation. Share of cost services are paid at 90% of Medicare. In practice for our providers, this means that the total reimbursement potential for those share of cost services is 90% of Medicare for HPSM CareAdvantage members, due to the important and stringent balance billing laws on providers to not charge Medi-Cal eligible individuals (including CareAdvantage members) for any cost sharing.
Effective April 1, 2025, all services under CareAdvantage agreements will be reimbursed at 100% of Medicare, including those with a Medicare share of cost. This applies to both facility and professional providers. The additional 10% will be reimbursed on the Medi-Cal wraparound claim.
How do these changes align with state policy and priorities?
Effective January 1, 2024, DHCS terminated the Proposition 56 add-on, and replaced it with Targeted Rate Increases (TRI), which are comprised of a minimum fee schedule for certain provider types and certain services. In 2024, HPSM temporarily funded a continuation of Proposition 56-level payments into its fee schedules, to avoid any rate decreases in cases where HPSM’s network rate was higher than the new mandated minimum of the TRI rates. Going forward, HPSM is removing supplemental Proposition 56 payments from network rates, and instead increasing the Medi-Cal mark-up as outlined above, which on average will yield higher compensation. Note that the minimum rate levels set by the state TRI fee schedule will still apply and will be paid in any case where the TRI fee schedule rate is higher than HPSM’s network rate. Read our most recent notification on TRI.
How is HPSM continuing to invest in efficiency and oversight of claims?
With these network rate increases, HPSM is also implementing several enhancements to payment oversight and efficiency in claims processing. It is critical for network providers to ensure that their billing staff are aware of current and forthcoming requirements to include rendering provider and taxonomy codes on all claims going forward, and to receive payments and remittance advice electronically, as is standard practice for most payers. Here are the key changes to be aware of:
- Site-of-service differential: For providers billing for members with Medi-Cal coverage only: HPSM is adopting DHCS Medi-Cal rate adjustments for applicable codes when a service is performed in a facility. This is being done to align with Medi-Cal methodology, when a second claim is paid to a facility for the same service. This update is not applicable for providers billing for services for HPSM CareAdvantage members.
- Rendering provider information is required: As a reminder, it is a requirement to note the rendering provider on HPSM claims.
- Coming soon – taxonomy code requirements: To ensure correct payment of these prioritized rate increases, HPSM will soon require the taxonomy code to be included on each claim. These will be required fields for payment and will be used to comply with state data reporting by specialty. Stay tuned for more information about this forthcoming change from HPSM.
- Coming soon – eliminating paper Remittance Advice mailing: Soon, HPSM will be requiring contracted providers to receive payment and remittance advice electronically as a condition for contracting. Providers can reach out to
our Provider Services team for assistance setting this up, or register by following these steps:
- Log in to our Provider Portal.
- Click the yellow “SIGN UP FOR EFT/ERA” button on the landing page.
- Complete the form. The form can take up to 30 days to process.
If you have questions, please email HPSM Provider Services.
