BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
511 (De La Torre)
Hearing Date: 8/17/2009 Amended: 7/15/2009
Consultant: Katie Johnson Policy Vote: Health 10-1
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BILL SUMMARY: AB 511 would impose a 5.5 percent quality
assurance fee (QAF) on ambulance transportation services
providers through June 30, 2016, for purposes of increasing
reimbursement rates paid by Medi-Cal for services rendered to
Medi-Cal beneficiaries.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
DHCS start-up costs unknown, but potentially in the
General/
millions of dollars Federal
DHCS ongoing unknown, but likely in the General/
oversight and hundreds of thousands, to be Federal
administration offset by fee revenue annually
QAF Revenue unknown, approximately General
$50 million annually, through FY
2015-16
Rate increases for ambulance unknown, approximately General/
services providers $100 million annually
ongoingFederal
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law establishes the Medi-Cal program, which provides
health care coverage for low-income Californians. Within
Medi-Cal, there are three existing quality improvement/assurance
fees: on Medi-Cal managed care plans, which sunsets October 1,
2009; on skilled nursing facilities (SNFs), which sunsets July
31, 2011; and on intermediate care facilities for the
developmentally disabled (ICF-DD).
This bill would impose a 5.5 percent quality assurance fee
(QAF), as a condition of participation in the Medi-Cal program,
on ambulance transportation services providers with the purpose
of drawing down matching federal Medicaid funds in order to
increase Medi-Cal reimbursement rates for these providers
through the end of FY 2015-2016. This bill would establish the
Medi-Cal Ambulance Transportation Services Providers Fund
(fund), which would serve as the repository for fee revenues.
This bill would provide that moneys in the fund would be
exclusively used to enhance federal financial participation for
and to support quality improvement efforts of ambulance
transportation services providers. QAF revenue is estimated to
be $50 million annually.
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AB 511 (De La Torre)
Medi-Cal reimburses providers between $118 and $128 per
ambulance transport. Fee revenues and their matching federal
funds would serve as the funding source to provide for rate
increases for ambulance services providers.
This bill would require providers to pay the fee to DHCS
quarterly and to include a form, as developed by the department,
with data on their gross receipts for that quarter. This bill
would require DHCS to request approval for this QAF from the
federal Centers for Medicare and Medicaid Services (CMS) and
would permit DHCS to alter the fee methodology contained in this
bill in order to comply with federal law, as specified. This
bill would require DHCS to make retrospective adjustments to the
amounts of fee revenue collected from providers to ensure that
the QAF on any single provider does not exceed 5.5 percent of
their annual revenue. DHCS would be permitted to implement these
provisions through either regulations, which, on their first
adoption, may be deemed emergency regulations, or by means of a
provider bulletin, or other similar instructions.
This bill does not provide that the fee would be available to
reimburse DHCS' initial and ongoing administrative costs. Thus,
there would be significant pressure on the General Fund in the
millions of dollars to cover those costs. In order to alleviate
that pressure, staff recommends that the bill be amended to
explicitly state that the fee would be available for that
purpose. Although this amendment would ensure that DHCS
administrative costs would be fully reimbursed, this bill would
not provide start-up funding for the department. Depending on
the amount of staff needed to implement this bill and the date
on which it becomes effective, there would be unknown General
Fund pressure in the hundreds of thousands to millions of
dollars to initially implement this QAF.
If a provider fails to pay all or part of the QAF within 60 days
of its due date, this bill would allow DHCS to deduct the unpaid
fee and interest owed from any Medi-Cal reimbursement payments
owed to the provider, upon written notification, until the full
amount is collected. If the QAF remains unpaid, DHCS could
assess a penalty on the provider in an amount up to 50 percent
of the unpaid fee amount.
This bill would prohibit the implementation of these provisions
unless the following conditions are met: 1) the state receives
CMS approval of the QAF; 2) the Legislature enacts legislation
during the 2009-2010 Regular Session that makes an appropriation
from the Medi-Cal Ambulance Transportation Services Providers
Fund and from the Federal Trust Fund to fund a Medi-Cal rate
increase for ambulance transportation service providers. Staff
notes that it appears that the Legislature would make an
appropriation from a fund prior to there being any money in it
and staff recommends that the bill be amended to clarify that
fund disbursement would not occur prior to the collection of the
QAF each quarter.
This bill would provide that, if there is a delay in the
implementation of these provisions, a provider subject to the
fee may be assessed the fee, but would not be required to pay
the fee unless the methodology is approved, the Medi-Cal rates
are increased as specified, and the increased rates are paid to
ambulance services providers.
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AB 511 (De La Torre)
This bill would require DHCS to pay Medi-Cal providers increased
reimbursement rates without the requirement that the providers
first pay the QAF. This would put significant pressure in the
tens of millions of dollars on the General Fund to fund the rate
increases prior to the collection of the QAF. Staff recommends
that the bill be amended to require that payments would not be
made until after the department receives the QAF each quarter
and that this bill's implementation would be contingent upon
federal financial participation.
This QAF would sunset July 1, 2016, but the rate increases would
continue to be in effect. There would be significant General
Fund pressure to continue funding these increased rates beyond
2016. Staff recommends that the bill be amended to clearly
provide that the increased rates would sunset with the fee.
This bill would provide that these provisions would be operative
only as long as the following occur: 1) CMS continues to allow
the QAF; 2) the Medi-Cal rate increase remains in effect; and,
3) the full amount of the QAF remains available for the
specified and related purposes. This bill would provide that
these provisions would be repealed on the date that they become
inoperative.