BILL ANALYSIS SENATE COMMITTEE ON PUBLIC SAFETY Senator Mark Leno, Chair A 2009-2010 Regular Session B 2 1 7 AB 2173 (Beall) 3 As Amended May 28, 2010 Hearing date: June 29, 2010 Government Code MK:mc EMERGENCY AIR MEDICAL TRANPORTATION PROVIDERS: PENALTY LEVY: REIMBURSEMENT AUGMENTATION HISTORY Source: California Association of Air Medical Services Prior Legislation: AB 1153 (Beall) - held in Assembly Appropriations, 2009 Support: CDF Firefighters Local 2881; Mercy Air; Westport Fire Protection District; Childrens Hospital Los Angeles; California Shock Trauma Air Rescue (CALSTAR); Westside Community Healthcare District; Patterson District Ambulance; Diamond Springs Fire District; John C. Fremont Healthcare District; Board for Critical Care Transport Paramedic Certification; Mercy Medical Center Mt. Shasta; Barton Health; The Oregon State Ambulance Association; Trinity County Life Support; Mercy Flights, Inc.; Hall Critical Care Transport; Placer Hills Fire Protection District; California Children's Hospital Association; Cal-Ore Life Flight; Reach Air Medical Services; Sheriff, Trinity County; PHI Air Medical; California Hospital Association; Regional Council of Rural Counties; Congressman Dennis Cardoza (More) AB 2173 (Beall) PageB Opposition:California Teamsters Public Affairs Council; Automobile Club of Southern California; AAA of Northern California Assembly Floor Vote: Ayes 65 - Noes 8 KEY ISSUE SHOULD $3 BE ADDED TO EVERY VEHICLE CODE FINE TO BE USED TO SUPPLEMENT MEDI-CAL PAYMENTS TO AIR AMBULANCES? PURPOSE The purpose of this bill is to add $3 to every Vehicle Code violation fine which will go into a newly created fund to supplement Medi-Cal payments to air ambulances. Existing law provides for an additional "state penalty" of $10 for every $10 or fraction thereof, upon every fine, penalty or forfeiture imposed and collected by the courts for criminal offenses including all offenses, except parking offenses, involving the Vehicle Code. Of the money collected, 70 percent is transmitted to the state and 30 percent remains with the county. The state portion of the money collected from the penalty is distributed in specified percentages among the following: Fish and Game Preservation Fund (0.33 percent); Restitution Fund (32.02 percent); Peace Officers Training Fund (23.99 percent); Driver Training Penalty Assessment Fund (25.70 percent); Corrections Training Fund (7.88 percent); Local Public Prosecutors and Public Defenders Fund (0.78 percent, not to exceed $850,000 per year); Victim-Witness Assistance Fund (8.64 percent); Traumatic Brain Injury Fund (0.66 percent). (Penal Code 1464.) Existing law provides for an additional county penalty (More) AB 2173 (Beall) PageC assessment of $7 for every $10 or fraction thereof, upon every fine, penalty, or forfeiture imposed and collected by the courts for criminal offenses, including all offenses involving a violation of the Vehicle Code or any local ordinance adopted pursuant to the Vehicle Code, except parking offenses. The money collected shall be placed in any of the following funds, if established by a County Board of Supervisors: Courthouse Construction Fund; Criminal Justice Facilities Construction Fund; Automated Fingerprint Identification Fund; Emergency Medical Services Fund; DNA Identification Fund. (Government Code 76000 et seq.) Existing law , as a part of the 2002-03 Budget Act, the Legislature imposed what was to be a temporary state surcharge of 20 percent on every base fine collected by the court. All money collected shall be deposited in the General Fund. This section was made permanent in the 2007 Budget. (Penal Code 1465.7.) Existing law established the "State Court Facilities Construction Fund" and added a state court construction penalty assessment in an amount up to $5 for every $10 or fraction thereof, upon every fine, penalty, or forfeiture imposed and collected by the courts for criminal offenses. The variation in the amount is dependant on the amount collected by the county for deposit into the local Courthouse Construction Fund established pursuant to Government Code Section 76100. As a result, the penalty assessment ranges from $0.00 for every $10 in two counties to the full $5 for every $10 in nine counties. This provision took effect on January 1, 2003. (Government Code 70372.) Existing law provides for a flat fee of $30 on every conviction for a criminal offense to ensure adequate funding for court security. (Penal Code 1465.8.) Existing law , established by Proposition 69, November 2004, levies a $1 penalty assessment on every $10 in fines and forfeitures resulting from criminal and traffic offenses and (More) AB 2173 (Beall) PageD dedicates these revenues to state and local governments for DNA databank implementation purposes - the state will receive 70 percent of these funds in the first two years, 50 percent in the third year and 25 percent annually thereafter. The remainder will go to local governments. (Government Code 76104.6.) Existing law creates an additional penalty assessment of $2 on every $10 to support emergency medical services. (Government Code 76000.5.) This bill provides that a penalty of $3 shall be imposed on every conviction for a violation of the Vehicle Code or a local ordinance adopted pursuant to the Vehicle Code, except parking offenses. This bill provides that the penalty should be in addition to the other penalty assessments, but should not be used to calculate the base fine. This bill provides that the county board of supervisors shall establish in a county treasury an emergency air medical transportation act fund into which the moneys should be deposited. This bill provides that on the last day of each calendar quarter of the year, the county treasurer shall transfer moneys in the county's emergency air medical transportation fund to the Controller for deposit to the Emergency Air Medical Transportation Act Fund which this bill establishes. This bill provides that the Emergency Air Medical Transportation Act Fund shall be administered by the State Department of Health Care Services. This bill provides that moneys in the Emergency Air Medical Transportation Act Fund shall be made available upon appropriation by the Legislature to augment emergency air medical transportation reimbursement payments made through the Medi-Cal program and to reimburse the Department of Health Care Services, the courts, and each county for its expenses of (More) AB 2173 (Beall) PageE administering this section. This bill provides that the Department of Health Care Services shall seek to obtain federal matching funds by using the moneys in the Emergency Air Medical Transportation Act Fund for the purpose of augmenting Medi-Cal reimbursement paid to emergency air medical transportation services providers. This bill provides that the Department of Health Care Services shall use the moneys in the Emergency Air Medical Transportation Act Fund and federal matching funds to increase the Medi-Cal reimbursement or supplemental payments for emergency air medical transportation services in an amount not to exceed normal and customary charges charged by the emergency air ambulance transportation service provider. RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION IMPLICATIONS The severe prison overcrowding problem California has experienced for the last several years has not been solved. In December of 2006 plaintiffs in two federal lawsuits against the Department of Corrections and Rehabilitation sought a court-ordered limit on the prison population pursuant to the federal Prison Litigation Reform Act. On January 12, 2010, a federal three-judge panel issued an order requiring the state to reduce its inmate population to 137.5 percent of design capacity -- a reduction of roughly 40,000 inmates -- within two years. In a prior, related 184-page Opinion and Order dated August 4, 2009, that court stated in part: "California's correctional system is in a tailspin," the state's independent oversight agency has reported. . . . (Jan. 2007 Little Hoover Commission Report, "Solving California's Corrections Crisis: Time Is Running Out"). Tough-on-crime politics have increased the population of California's prisons dramatically while making necessary reforms impossible. . . . As a result, the state's prisons have become places "of extreme peril to the safety of persons" they house, . (More) AB 2173 (Beall) PageF . . (Governor Schwarzenegger's Oct. 4, 2006 Prison Overcrowding State of Emergency Declaration), while contributing little to the safety of California's residents, . . . . California "spends more on corrections than most countries in the world," but the state "reaps fewer public safety benefits." . . . . Although California's existing prison system serves neither the public nor the inmates well, the state has for years been unable or unwilling to implement the reforms necessary to reverse its continuing deterioration. (Some citations omitted.) . . . The massive 750% increase in the California prison population since the mid-1970s is the result of political decisions made over three decades, including the shift to inflexible determinate sentencing and the passage of harsh mandatory minimum and three-strikes laws, as well as the state's counterproductive parole system. Unfortunately, as California's prison population has grown, California's political decision-makers have failed to provide the resources and facilities required to meet the additional need for space and for other necessities of prison existence. Likewise, although state-appointed experts have repeatedly provided numerous methods by which the state could safely reduce its prison population, their recommendations have been ignored, underfunded, or postponed indefinitely. The convergence of tough-on-crime policies and an unwillingness to expend the necessary funds to support the population growth has brought California's prisons to the breaking point. The state of emergency declared by Governor Schwarzenegger almost three years ago continues to this day, California's prisons remain severely overcrowded, and inmates in the California prison system continue to languish without constitutionally (More) AB 2173 (Beall) PageG adequate medical and mental health care.<1> The court stayed implementation of its January 12, 2010, ruling pending the state's appeal of the decision to the U.S. Supreme Court. On Monday, June 14, 2010, the U.S. Supreme Court agreed to hear the state's appeal in this case. This bill does not appear to aggravate the prison overcrowding crisis described above. COMMENTS 1. Need for This Bill According to the author: Air ambulance services provide life-saving emergency transportation from accident scenes directly to trauma centers for the most critical patients. Emergency helicopter air ambulance providers maintain a critical link between rural areas and urban tertiary care hospitals (i.e. trauma centers, heart/stroke centers, and burn units). They are an essential part of the statewide EMS system and play a key role in disaster response and homeland security. Emergency air ambulance services provide coverage to multiple counties within a 100-mile radius of their bases. As a result, transports often originate in a county other than where they are based, which makes it virtually impossible for them to be funded by local tax support except in the geographically largest of ----------------------- <1> Three Judge Court Opinion and Order, Coleman v. Schwarzenegger, Plata v. Schwarzenegger, in the United States District Courts for the Eastern District of California and the Northern District of California United States District Court composed of three judges pursuant to Section 2284, Title 28 United States Code (August 4, 2009). (More) AB 2173 (Beall) PageH counties. These critical service providers transport all emergency patients without knowing if the patient has any form of medical insurance or ability to pay for the service. A significant number of emergency patients transported by air ambulances have no insurance, are not eligible for Medi-Cal, and have no ability to pay for the service, yet these patients are rightfully given the same high level of care as those with medical insurance. For hospitals where patients are delivered, air ambulance services providers are not eligible to apply for additional federal funding for providing services to high numbers of indigent patients pursuant to California's disproportionate share hospital (DSH) program under the Medi-Cal program. The Medi-Cal program pays air ambulance services far below the cost of providing emergency air transportation, and pays nothing if the patient is indigent and not eligible for Medi-Cal. Medi-Cal rates for air ambulance services have not increased since 1993. Current Medi-Cal base rates for helicopter services are only 40% of the average Medicare rates in California, which are similarly inadequate to cover costs. In rural areas, this can fall below 35% of the cost of the transport service. AB 2173 will provide for increased Medi-Cal funding of emergency air ambulance transportation by imposing a flat $3 fee on each motor vehicle violation in California, with the exception of parking tickets. Revenue generated by the additional penalty will be augmented with federal matching funds by the State Department of Health Care Services, who will then use the funds to increase Medi-Cal payment rates and/or provide supplemental payments to air ambulance providers. This bill would provide critical funding to (More) AB 2173 (Beall) PageI this essential life saving service. 2. Additional $3 on Every Vehicle Code Violation This bill creates an additional $3 penalty on every Vehicle Code or local ordinance fine to be deposited in a fund created by this bill called the Emergency Air Medical Transportation Act. The money is to be used to supplement the Medi-Cal payments to air medical transportation providers. 3. Diminishing Returns Until the budget year 2002-2003, there was 170 percent in penalty assessments applied to every fine, the current penalty assessments are 270 percent of the base fine. Thus, a $100 fine is approximately $370; a $500 fine approximately $1,850; a $800 fine approximately $2,960, et cetera. Judges have the discretion to reduce the base fine, which then reduces revenue to state and local governments, as well as to assessments. With the current penalty assessments already so high, increasing fines and assessments may have the unintended consequence of reduced fine collections. Indigent defendants facing ever-increasing fees may simply choose to spend time in jail in lieu of paying the fine, causing taxpayers to pay the jail costs while state and local government receive fewer penalty funds. Moreover, county jail population caps may provide additional incentives to opt for jail time over fines, as the time served for nonviolent offenders may be minimal. As noted by the California Research Bureau (CRB) in its 2006 review of penalty assessments, "High penalty assessments may result in higher rates of default by the guilty parties. Some offenders may spend time in jail, or plea for community service, rather than pay the fine and penalty assessment. The end result may be that a substantial amount of fines, fees, and revenue is not collected." (More) 4. Payments to Air Medical Transportation According to CALSTAR, one of the supporters of this bill, while the current raw cost of their air ambulance service the amount they are paid for such service is as follows: Average Private Insurance Payment--$20,795 Average Medicare Payment---$5,400 Average Medi-cal Payment---$2,838 Some percentage of their transports are also of indigent people who do not have any type of insurance. According to the sponsor, the Medi-Cal rates have not increased in 15 years. This bill is intended to raise money to supplement the Medi-Cal payments. They state that the funds raised by this assessment will draw matching funds from the federal government. The supporters argue that air ambulance patients are often victims of vehicle accidents. If that is the case, it would be interesting to know how much of the costs of the service are eventually reimbursed by a car insurance settlement. 5. Assessments as a Revenue Source As noted above, increased penalty assessments may result in less fines actually being collected. Thus, assessments are not a reliable funding source. With changes to the health care system and other proposals to increase the Medi-Cal payments for air ambulance drivers, would it be appropriate to place a sunset in this bill to see if a more reliable funding for the payment of the air ambulance services is found? SHOULD A SUNSET BE PUT IN THIS BILL? 6. Opposition The Automobile Club of Southern California and the AAA of Northern California state that 70 percent to 80 percent of (More) AB 2173 (Beall) PageK penalty assessment revenue is generated from Vehicle Code moving violations. The AAA contends that while air medical transportation is a laudable program, increasing program funding via Vehicle Code assessments places a disproportionate burden upon the motoring public. The California Teamsters Public Affairs Council notes the cost of citations has increased dramatically in recent years as an alternative means of funding services. As a result, citations are now unaffordable for many Californians and often fall on commercial drivers. ***************