BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 511
A
AUTHOR: De La Torre
B
AMENDED: June 23, 2009
HEARING DATE: July 8, 2009
5
CONSULTANT:
1
Dunstan/
1
SUBJECT
Medi-Cal: ambulance transportation services providers:
quality assurance fees
SUMMARY
Imposes, as a condition of participation in the Medi-Cal
Program a 5.5 percent quality assurance fee (QAF) on
ambulance transportation services providers until the
2015-16 fiscal year, and requires revenue from the QAF to
be used exclusively to enhance federal financial
participation (FFP) under Medi-Cal, provide additional
reimbursements or to support quality improvement efforts.
Implements this bill only if the state receives federal
approval and legislation is enacted during the 2009-10
legislative session that makes an appropriation to fund a
Medi-Cal rate increase for ambulance transportation
services providers.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Medicaid program to provide comprehensive
health benefits to low-income persons. Requires that
provider fees levied by states must conform to specified
standards and criteria.
Continued---
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Existing state law:
Establishes the Medi-Cal program as California's Medicaid
program, administered by the Department of Health Care
Services (DHCS), which provides comprehensive health care
coverage for low-income individuals and their families;
pregnant women; elderly, blind, or disabled persons;
nursing home residents; and refugees who meet specified
eligibility criteria.
Establishes a schedule of benefits under the Medi-Cal
Program, which includes emergency and nonemergency medical
transportation. Establishes, through regulation, maximum
reimbursement rates for medical transportation services
under Medi-Cal.
Imposes within the state's Medi-Cal program, a quality
improvement fee on Medi-Cal managed care plans and a
quality assurance fee on skilled nursing facilities (SNFs)
and intermediate care facilities for the developmentally
disabled (ICF-DD), as specified.
This bill:
Imposes, as a condition of participation in the Medi-Cal
Program, for each ambulance transportation services
provider that derives revenue from the provision of
ambulance transportation services, a QAF, each state fiscal
year based on the provision of ambulance transportation
services.
Requires the QAF to be assessed on all Medi-Cal ambulance
transportation services providers, except for Medi-Cal
ambulance transportation services that DHCS has exempted to
meet federal requirements.
Requires the amount of the QAF assessed on each Medi-Cal
ambulance transportation services provider to be based on
the revenue received by the provider from the provision of
ambulance transportation services, and to be calculated
using a specified methodology. Provides that for the
2009-10 through 2015-16 fiscal years, the QAF for each
ambulance transportation services provider, when combined
with applicable licensing fees, shall not exceed the
amounts allowable under federal law.
Provides that if federal approvals are not obtained during
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the 2009-2010 fiscal year, DHCS can assess the QAF.
Prohibits DHCS from requiring a provider pay the assessed
fee until federal approval is obtained and the applicable
Medi-Cal rates are increased. Requires providers that have
been assessed a fee to pay the fee within 60 days of the
date rates are increased and paid to the providers.
Prescribes when the provider must pay the QAF and the
specific accompanying material that must be submitted.
Allows DHCS to withhold Medi-Cal payments if a provider is
late with QAF payments and assess a penalty in an amount
that does not exceed 50 percent of the unpaid fee.
Permits DHCS to adopt regulations as are necessary to
implement this bill, including emergency regulations,
through the rulemaking provisions of the Administrative
Procedure Act. States legislative intent that the
regulations adopted pursuant to this bill be adopted on or
before July 31, 2012.
Permits DHCS, as an alternative to adopting regulations, to
implement this bill, in whole or in part, by means of a
provider bulletin, or other similar instructions, without
taking regulatory action, provided that no bulletin or
other similar instructions remain in effect after July 31,
2012.
Requires DHCS to deposit the QAF collected pursuant to this
bill in the Medi-Cal Ambulance Transportation Services
Providers Fund, which is created in the State Treasury, and
requires the fund to also include interest and dividends
earned on moneys in the fund.
Requires moneys in the Fund, upon appropriation by the
Legislature, to be available exclusively to enhance FFP for
ambulance transportation services under the Medi-Cal
program or to provide additional reimbursement, and to
support quality improvement efforts of ambulance
transportation services providers, including advanced life
support services.
Requires DHCS to request approval from the federal Centers
for Medicare and Medicaid Services (CMS) for the
implementation of this bill, and permits DHCS to alter the
methodology specified in this bill, to the extent necessary
STAFF ANALYSIS OF ASSEMBLY BILL 511 (De La Torre) Page
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to meet the requirements of federal law or regulations or
to obtain federal approval. Permits DHCS to also add
categories of exempt ambulance transportation services
providers, or to apply a non-uniform fee to ambulance
transportation services providers that are subject to the
fee in order to meet the requirements of federal law or
regulations.
Requires DHCS to make retrospective adjustments, as
necessary, to the amounts calculated pursuant to this bill
in order to ensure that the QAF for any provider in a
particular state fiscal year does not exceed 5.5 percent of
the revenue derived by a provider subject to the fee from
the provision of ambulance transportation services.
Requires this bill to be implemented only if both of the
following conditions are met:
The state receives CMS approval of the QAF;
and,
Legislation is enacted during the 2009-10
session that makes an appropriation from the Fund
and from the Federal Trust Fund to fund a Medi-Cal
rate increase for ambulance transportation
services providers.
Requires this bill to remain operative only as long as all
of the following conditions are met:
CMS continues to allow the use of the QAF
provided in this bill;
The Medi-Cal rate increase for ambulance
transportation providers remains in effect; and,
The full amount of the QAF assessed and
collected pursuant to this bill remains available
exclusively to enhance FFP for ambulance
transportation service providers in Medi-Cal.
Provides that if any of the preceding conditions are not
met, this bill will become inoperative after a declaration
is made by DHCS that the conditions have not been met.
Requires this bill to become inoperative in the event of a
final judicial determination made by any state or federal
court that is not appealed, or by a court of appellate
jurisdiction that is not further appealed, in any action by
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any party, or a final determination by CMS that FFP is not
available with respect to any payment made under the
methodology implemented pursuant to this bill because the
methodology is invalid, unlawful, or contrary to any
provision of federal law or regulations, or of state law.
Requires this bill to be repealed on the date that it
becomes inoperative.
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FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, there will be annual increased Medi-Cal payments
to ambulance providers of about $100 million (50 percent
provider QAF and 50 percent federal funds) to $110 million.
They also estimate that there will be staffing costs to
DHCS of $200,000 (50 percent General Fund) to implement the
requirements of this bill, including obtaining federal
approval and establishing claims processing to track QAF
revenues and compliance with provider payment requirements.
BACKGROUND AND DISCUSSION
Provider fees
Federal law authorizes states to levy fees on health care
providers if the fees meet federal requirements. Many
states (including California) fund a portion of their share
of Medicaid Program costs through a fee on health care
providers. Under these funding methods, states collect
funds (through fees, taxes, or other means) from providers,
which can then be matched with federal funds. The
resulting combination of state and federal funds is then
used to increase Medicaid reimbursement to providers.
Federal law has specific requirements governing provider
fees. To prevent states from only levying an assessment on
certain providers, federal law requires provider fees to be
"broad based" and uniformly imposed throughout a
jurisdiction, meaning that they cannot be levied on a
subgroup of providers, such as only those who are enrolled
in Medicaid programs. States are prohibited from having a
provision that would ensure providers are "held harmless"
from the impact of the fee, meaning that all of the funds
that an individual provider is paid are returned to that
provider. As a practical matter, the federal requirements
result in provider fee programs where some providers
receive a net benefit and others do not.
California currently has the following provider fees on
intermediate care facilities for the developmentally
disabled, Medi-Cal managed care plans and SNFs:
a) A quality improvement fee (QIF) is assessed on
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Medi-Cal managed care plans at a rate of 5.5 percent
of revenues. The net increase in revenue is deposited
into the state general fund, and is estimated to be
$238.8 million (total funds) in 2008-09. Half of the
fee is used to draw down federal funds and is returned
to the Medi-Cal managed care plans through increased
rates. The fee sunsets on October 1, 2009 and is
projected to raise $89.9 million in 2009-10. The QIF
is currently assessed on Medi-Cal managed care
revenue, but changes in federal law will likely result
in this fee sunsetting under state law;
b) A quality assurance fee (QAF) on skilled nursing
facilities at a rate of six percent of net revenues
(which excludes Medicare revenue). The QAF is
projected to generate $293 million in 2009-10 and
sunsets on July 31, 2011. The legislation that
established the QAF also restructured the payment
system for SNFs from a flat rate system to one that
reimburses based on costs, and that provides an
incentive for facilities to spend more in certain
areas, such as labor. The QAF has been covering the
additional costs generated by AB 1629, but beginning
in 2010-11, the General Fund is expected to have to
fund the growth in AB 1629 costs; and,
c) As a condition of participation in Medi-Cal, a QAF
is assessed on the gross receipts of intermediate care
facilities for the developmentally disabled at a rate
of 5.5 percent with the amount paid in licensing fees
reduced from the total amount of revenue generated.
The QAF revenues are projected to rise, on a net
basis, to $19.2 million in the 2009-10 fiscal year.
DHCS indicates these facilities receive $13.1 million
above the amount facilities paid in fees.
Medi-Cal Rates
The California Ambulance Association (CAA) provides the
following comparison of ambulance rates, which CAA states
is from an "Industry Performance Survey" done by Hobbs &
Ong on behalf of CAA:
Annual California Ambulance Services - By Source
of Payment
-------------------------------------------------------------
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|Payment | % of | % of | 2005 Cost per | 2005 |
|Source |Transport | Revenue | Transport | Average |
| | | | |Reimbursemen|
| | | | | t Per |
| | | | | Transport |
|----------+----------+----------+---------------+------------|
|Medicare | 34.9% |34.9% | $562 |$ 520 |
|----------+----------+----------+---------------+------------|
|Medi-Cal | 21% |10.7% | $562 |$ 250 |
|----------+----------+----------+---------------+------------|
|Facility | 8.2% | 8.9% | $562 |$ 723 |
|----------+----------+----------+---------------+------------|
|Private | 17.9% | 6.3% | $562 |$ 201 |
|pay | | | | |
|----------+----------+----------+---------------+------------|
|Other | 17.7% |38.7% | $562 | $1,100 |
|insurers | | | | |
|----------+----------+----------+---------------+------------|
|Other | 0.3% | 0.2% | $562 |$ |
| | | | |342 |
-------------------------------------------------------------
This table does not reflect recent Medi-Cal rate reductions
and according to the Assembly Appropriations Committee
analysis, Medi-Cal is the lowest of all payment types, even
lower than patients paying out of pocket
Ambulance providers, unlike many other Medi-Cal providers,
are mandated to care for those who require services.
Providers such as non-emergency physicians, dentists, and
surgeons may simply choose not to treat Medi-Cal patients,
ambulance providers cannot. The Emergency Medical Treatment
and Active Labor Act (EMTALA), enacted in 1986, prohibits
the practice of patient dumping, treatment denial and
patient discharge based on anticipated high emergency
treatment costs.
Related bills
AB 1174 (Hernandez) requires Medi-Cal to cover ambulance
services when a patient reasonably believes that without an
ambulance a serious health condition, as specified, might
result; increases and establishes in statute maximum
Medi-Cal reimbursement rates for ambulance transportation
services. This bill is on the Assembly Appropriations
Committee suspense file.
STAFF ANALYSIS OF ASSEMBLY BILL 511 (De La Torre) Page
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AB 1153 (Beall) levies an additional penalty of $3 upon
every fine, penalty, or forfeiture imposed and collected by
the courts for certain vehicle violations to be matched
with federal funds and used for emergency air medical
transportation. This bill is on the Assembly
Appropriations Committee suspense file.
AB 1383 (Jones) would state legislative intent to enact
legislation that would impose a fee to be paid by hospitals
that must be used to increase federal matching funds in
order to increase Medi-Cal payments to hospitals, and would
also provide funding for children's health coverage. AB
1383 is scheduled to be heard in the Senate Health
Committee on July 8, 2009.
Previous legislation
AB 1629 (Frommer), Chapter 875, Statutes of 2004)
established the SNF QAF, established the Medi-Cal Long-Term
Care Reimbursement Act; and contained an appropriation to
fund an increase in the 2004-05 SNF Medi-Cal reimbursement
rates.
AB 1183 (Committee on Budget), Chapter 758, Statutes of
2008 extended the AB 1629 QAF by an additional two years,
to July 31, 2011.
Arguments in support
American Medical Response (AMR), the sponsor of the
bill, argues this bill represents a unique opportunity
to expand health care access and raise the level of
health care outcomes by drawing down additional federal
Medicaid funding for ambulance transport services. AMR
argues inadequate Medi-Cal reimbursement for ambulance
transport has put an enormous strain on the state's
health care structure and in particular, the state's
emergency medical services (EMS) system. Unlike other
Medi-Cal providers, ambulance providers cannot limit
their Medi-Cal patients in order to find a different
payor mix. AMR states ambulance providers have been
recently saddled with debilitating Medi-Cal cuts
including last year's 10 percent provider rate
reduction, while having to endure additional increases
in vehicle license fees and fuel costs which are
significant for large emergency vehicles. AMR states
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that ambulance transport has the worst cost-of-service
to reimbursement ratio of all health care providers in
the Medi-Cal system.
AMR also states there are federal dollars that can be
drawn back down to the state through a QAF that will
permit ambulance providers to establish a means to
increase patient outcomes and reverse, or at least
slow, the rate of degradation of reimbursement rates to
ambulance transport. The QAF in this bill would be
assessed on ambulance providers who chose to
participate in the Medi-Cal Program and the resulting
revenue would be matched by federal funds and then
returned to ambulance providers in the form of an
increase in the Medi-Cal rate. No additional funding
through the state's General Fund (GF) is required to
affect this program and the federal dollars which will
flow back to the state will be used by ambulance
providers to maintain the high level of care that is
expected of the state's EMS and 9-1-1 programs. AMR
states it is committed to working diligently with this
partnership between the state and federal authorities
in crafting this important program to ensure the state
has a safety-net EMS system its residents can rely
upon.
Support in concept.
The California Ambulance Association (CAA) writes it
supports "in concept" this bill, which provides broad
parameters for the enactment of a QAF for private ambulance
providers in this state. CAA states ambulance providers
are an essential part of California's health-care safety
net, and unique in two ways when compared to other Medi-Cal
providers: a) Ambulance providers are required to respond
to, treat and transport all emergency patients, regardless
of ability to pay; and, b) are required to do so within a
specified time according to mandated response times. CAA
states California's ambulance services are in crisis and
there are many reasons for this, but chief among them is
the ever increasing cost of providing these important
public services and the increasingly inadequate
reimbursement level for providing these services under the
state's Medi-Cal Program. CAA states, based upon
discussions with the Administration, and taking into
account the fiscal realities faced by the state, that they
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believe that a QAF, such as that provided under current law
for SNFs, may be the best avenue to provide a desperately
needed Medi-Cal funding increase for private ambulance
providers in this state.
PRIOR ACTIONS
Assembly Floor: 69-5
Assembly Appropriations:14-3
Assembly Health: 19-0
COMMENTS
1. We do not know which providers will benefit or lose
from this proposal.
AMR and CAA indicate they will be modeling the proposed
provider fee for purposes of determining the amount of
revenue the fee would generate, and the increase in
Medi-Cal reimbursement that would result from this bill.
2. This bill could put pressure on the state's General
Fund.
If adopted, the provider fee would result in new money
for ambulance transportation services providers. If the
program sunsets, there would be pressure on the General
Fund to continue the Medi-Cal increases formerly funded
by the provider fee. Additionally, according to the
Assembly Appropriations Committee analysis, DHCS will
incur costs, split between the General Fund and federal
funds, to administer the program. The sponsor has
indicated a willingness to work with DHCS on this bill,
including the issue of administrative costs.
3. DHCS authority to adopt emergency regulations.
The bill grants this authority to DHCS to speed
implementation which would mean delivering the funds to
the providers more quickly. However, the bill does not
limit the authority for emergency regulations to the
initial adoption of regulations.
Suggested amendment
Page 4, line 34
(b) The director may adopt regulations as are necessary
to implement this article. These regulations may be
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adopted as emergency regulations in accordance with the
rulemaking provisions of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code). For
purposes of this article, the first adoption of
regulations shall be deemed an emergency and necessary
for the immediate preservation of the public peace,
health and safety, or general welfare. The regulations
shall include, but need not be limited to, any
regulations necessary for any of the following purposes:
4. DHCS has a great deal of flexibility under the bill.
The bill allows DHCS to modify any methodology contained
within the bill to the
extent necessary to meet the requirements of federal law
or regulations or to obtain
federal approval. However, the committee may want to
consider the following
amendment to provide increased safeguards.
Proposed amendment
Page 6, line 1
(2) The director may alter the methodology specified in
this article, to the extent necessary to meet the
requirements of federal law or regulations or to obtain
federal approval. If the director, after consulting with
affected ambulance transportation services providers,
determines that a modification is needed, the director
shall execute a declaration stating that this
determination has been made. The director shall retain
the declaration and provide a copy, within five working
days of the execution of the declaration, to the fiscal
and appropriate policy committees of the Legislature.
POSITIONS
Support: American Medical Response (sponsor)
California Ambulance Association
Oppose: None received
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