BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
511 (De La Torre)
Hearing Date: 8/27/2009 Amended: 7/15/2009
Consultant: Katie Johnson Policy Vote: Health 10-1
_________________________________________________________________
____
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.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
DHCS start-up costs unknown, but potentially in the
General/
hundreds of thousands of dollarsFederal
DHCS ongoing oversight unknown, but likely in the Special*
and administration hundreds of thousands, to be
offset by fee revenue annually
BOE start-up costs unknown, but likely $500 to
$1,000 General
BOE ongoing oversight unknown, but likely in the
hundredsSpecial*
and administration of thousands, to be offset by
fee
revenue annually
QAF Revenue unknown, approximately Special*
$50 million annually, through FY
2015-16
Rate increases for ambulance unknown, approximately Special/*
services providers $100 million annually
ongoingFederal
*QAF funds; General Fund pressure to the extent that moneys
raised by the QAF are not in an amount sufficient to cover the
reasonable costs of the program and the rate increases.
_________________________________________________________________
____
STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
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).
Page 2
AB 511 (De La Torre)
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.
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
Page 3
AB 511 (De La Torre)
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.
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.
The author's proposed amendments would impose a QAF on ambulance
transportation services providers equal to 5.5 percent of their
annual receipts divided by the annual number of transports. By
August 1, 2010, DHCS would be required to reimburse ambulance
transportation services providers in an amount equal to the
rates established by the federal Medicare program. Staff notes
that there would be General Fund cost pressure in the millions
of dollars to ensure that the QAF revenue provide sufficient
funds to increase Medi-Cal ambulance transportation services
provider rates to the Medicare level and to cover the reasonable
costs to administer the program. The amendments would provide
that the Medi-Cal rate increases would remain in effect as long
as the QAF is imposed.
They would require the State Board of Equalization (BOE) to
accept the fee each month from providers and would permit BOE to
promulgate regulations relating to the collection of the fee.
Providers would also submit the number of transports and gross
receipts for each month, commencing January 1, 2010. If the
provider fails to pay the fee, BOE may assess an unspecified
penalty; DHCS may deduct the unpaid fee from
Page 4
AB 511 (De La Torre)
the provider's Medi-Cal reimbursement payments. The amendments
would permit DHCS to adopt regulations, and states intent that
they be adopted on or before July 31,
2012, for the reasonable costs associated with the
implementation of the QAF, the development of necessary forms,
and other details, definitions, and formulas. It would take BOE
approximately $500,000 - $1,000,000 in General Fund costs to
develop forms and to determine the universe of ambulance
transportation services providers. There could be additional
General Fund costs to BOE to promulgate regulations.
The imposition of the QAF would be contingent upon CMS approval
and would permit DHCS to alter the fee methodology in order to
comply with federal requirements. The amendments would require
DHCS to make retrospective adjustments to the fee assessments to
ensure that they do not exceed 5.5 percent of a provider's gross
receipts. If there is a delay in the implementation of the QAF
for any reason, including a delay in federal approval of the
QAF, all of the following would apply: 1) a provider may be
assessed the QAF in the amount the provider would be required to
pay if the methodology had been approved, but would not be
required to pay the QAF until the methodology was approved; 2)
DHCS would be allowed to retroactively increase and make payment
of rates to providers; 3) Medi-Cal rate increases would be
required to be paid to providers within 30 days of the approval
of the methodology. Staff notes that the meaning of delay is
unclear. Staff recommends that the bill be amended to define or
to specify its meaning.