BILL ANALYSIS Ó
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 678
A
AUTHOR: Pan
B
AMENDED: May 27, 2011
HEARING DATE: June 22, 2011
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CONSULTANT:
7
Bain
8
SUBJECT
Medi-Cal: supplemental provider reimbursement
SUMMARY
This bill would allow ground emergency medical
transportation service providers owned by public entities
(public ground emergency medical transportation providers)
to receive supplemental Medi-Cal reimbursement, in addition
to the rate of payment that these providers would otherwise
receive for Medi-Cal ground emergency medical
transportation services, up to actual costs. The
nonfederal share of the supplemental reimbursement would be
paid with funds from specified governmental entities
through certified public expenditures (CPEs).
CHANGES TO EXISTING LAW
Existing law:
Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), which provides
health benefits to low-income children, their parents or
caretaker relatives, pregnant women, elderly, blind or
disabled persons, and refugees who meet specified
eligibility criteria.
Establishes a schedule of benefits under the Medi-Cal
Continued---
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program, which includes emergency and nonemergency medical
transportation.
Establishes, through regulation, maximum Medi-Cal
reimbursement rates for medical transportation services,
and prohibits providers from billing Medi-Cal at rates that
exceed charges made to the general public.
Reduces specified Medi-Cal provider rates (including for
ground ambulance services), effective June 1, 2011, by 10
percent for dates of services on and after June 1, 2011,
provided the reduction meets federal Medicaid requirements,
receives federal approval, and allows the state to receive
federal financial participation (FFP). If the director of
DHCS determines that the payments do not comply with
federal Medicaid requirements or that FFP is not available
with respect to any payment that is reduced, the director
retains the discretion not to implement the particular
payment reduction and to adjust the payment as necessary to
comply with federal Medicaid requirements. This rate
reduction replaces an existing one percent Medi-Cal
provider reduction currently in effect.
This bill:
Allows ground emergency medical transportation services
providers owned by public entities (the state, a city, a
county, a city and county, a fire protection district, a
special district, a health care district or a federally
recognized Indian Tribe) that are enrolled in the Medi-Cal
program and that provide emergency medical transportation
services to Medi-Cal beneficiaries continuously through the
state fiscal year, to receive supplemental Medi-Cal
reimbursement, in addition to the rate of payment that the
provider would otherwise receive for Medi-Cal ground
emergency medical transportation services.
Makes participation in the program by a public ground
emergency medical transportation services provider
voluntary. Requires, if an applicable governmental entity
elects to seek supplemental reimbursement on behalf of a
public ground emergency medical transportation service
provider, the governmental entity to do all of the
following:
§ Certify, in conformity with the federal regulatory
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requirements, that the claimed expenditures for the
ground emergency medical transportation services (known
as certified public expenditures or CPEs) are eligible
for FFP.
§ Provide evidence supporting the certification as
specified by DHCS, and submit data as specified by DHCS
to determine the appropriate amounts to claim as
expenditures qualifying for FFP.
§ Keep, maintain, and have readily retrievable, any records
specified by DHCS to fully disclose reimbursement amounts
to which the public emergency medical transportation
provider is entitled, and any other records required by
the federal Centers for Medicare and Medicaid Services
(CMS).
Requires the supplemental reimbursement paid under this
bill to be calculated and paid as follows:
§ Requires the supplemental reimbursement to be equal to
the amount of FFP received as a result of the CPE claim.
§ Prohibits the CPE amount, when combined with the amount
received from all other sources of reimbursement from the
Medi-Cal program, from exceeding 100 percent of actual
costs, as determined pursuant to the Medi-Cal State Plan,
for ground emergency medical transportation services.
§ Requires the supplemental Medi-Cal reimbursement provided
by this bill to be distributed exclusively to public
ground emergency medical transportation service providers
on a per-transport basis or other federally permissible
basis.
Requires DHCS to obtain approval from the federal CMS for
the payment methodology to be utilized, and prohibits DHCS
from making any payment prior to obtaining that approval.
States legislative intent in enacting this bill to provide
the supplemental reimbursement described in this bill
without any expenditure from the General Fund (GF).
Requires a public ground transportation ambulance provider,
as a condition of receiving supplemental reimbursement
under this bill, to enter into, and maintain, an agreement
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with DHCS for the purposes of implementing this bill and
reimbursing DHCS for the costs of administering this bill.
Requires the nonfederal share of the supplemental
reimbursement submitted to the CMS for purposes of claiming
FFP to be paid only with funds from the governmental
entities that are certified to the state.
Requires DHCS to promptly seek any necessary federal
approvals for the implementation of this bill. Permits
DHCS to limit the program to those costs that are allowable
expenditures under federal Medicaid law. Prohibits this
bill from being implemented if federal approval is not
obtained.
Requires DHCS to submit claims for FFP for the expenditures
under this bill that are allowable expenditures under
federal law.
Requires DHCS, on an annual basis, to submit any necessary
materials to the federal government to provide assurances
that claims for FFP will include only those expenditures
that are allowable under federal law.
Requires the director of DHCS, if either a final judicial
determination is made by any court of appellate
jurisdiction, or a final determination is made by the
administrator of the federal CMS, that the supplemental
reimbursement provided in this bill must be made to
providers not described in this bill, to execute a
declaration stating that the determination has been made;
on that date this bill becomes inoperative. Requires the
declaration to be provided to specified entities, including
legislative fiscal and policy committees.
Permits DHCS to implement and administer the provisions of
this bill by means of provider bulletins, or similar
instructions, without taking regulatory action.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, ongoing DHCS administrative costs of
approximately $300,000 (50 percent GF, 50 percent federal
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funds), which would be reimbursed by the local entities who
participate in the program.
BACKGROUND AND DISCUSSION
According to the author, the Medi-Cal reimbursement rate for
ambulance transportation, as in many other categories, has not
kept pace with the cost for providing these vital services. All
of California's fire departments provide Basic Life Support
(BLS) services and many provide Advanced Life Support (ALS) and
ambulance transport services as part of the emergency response
system. The author states that as California's health system
continues to deteriorate, local fire departments, as first
responders, are transporting Medi-Cal patients at an
ever-increasing rate. The author states that fire departments
are an essential part of California's health care safety net,
and are unique when compared to other Medi-Cal providers,
because fire department ambulances are required to respond,
treat and transport all emergency patients, without exception
and without regard to a patient's ability to pay, within a
mandated time period, with fully equipped and appropriately
staffed ambulances.
This bill would use a federal option that provides a 50 percent
federal match through Medicaid for the unreimbursed expenses of
local agencies that provide Medi-Cal ground emergency medical
transportation services. This supplemental reimbursement
program is a voluntary program whereby public agencies, through
DHCS and following a federally approved methodology, submit CPEs
for unreimbursed Medi-Cal ground emergency medical
transportation services to DHCS for reimbursement by the federal
government.
Ambulance providers in California
According to estimates by the California Ambulance Association
(CAA), there are approximately 715 ambulance providers in
California, of which 77 percent are fire departments. However,
of the licensed ambulances, 74 percent are private.
Approximately 8.3 percent of the California population is
transported in an ambulance annually, and the Medi-Cal
fee-for-service program reimbursed slightly over 292,000
transports in 2009, at a cost of nearly $44 million. CAA
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estimates there were an additional 171,000 ambulance transports
reimbursed by Medi-Cal managed care plans in 2009, at a cost of
$26 million.
Federal Medicaid regulations and public funds as the non-federal
share
Federal Medicaid regulations establish requirements on the
public funds that can be used as the state share to draw down
FFP in Medicaid. CPEs are one of several mechanisms that a
state may employ to obtain FFP and to make supplemental payments
to Medi-Cal providers without cost to the GF. Under a CPE
arrangement, government providers certify their Medicaid
expenditures to the state, and the state then obtains federal
reimbursement on the basis of these CPEs. Medicaid law allows
states to finance the nonfederal share of payments with CPEs as
long as the funds are derived from state or local tax revenue
and are certified by units of local or state government as
eligible for federal reimbursement. States are responsible for
ensuring that expenditures are eligible for federal
reimbursement by reviewing standard cost reports filed annually
by each government provider. The reimbursement rate cannot
exceed the equivalent Medicare rate.
Under this bill, state and local entities would have the option
to claim FFP for the difference between the reimbursement rate
under the Medi-Cal Program and the actual cost of providing the
service. The program in this bill is modeled after AB 915
(Frommer), Chapter 747, Statutes of 2002, which authorized local
public agencies and public health facilities to use local funds
to obtain FFP for supplemental Medi-Cal reimbursements for
hospital outpatient services. AB 959 (Frommer), Chapter 162,
Statutes of 2006, expanded this to facilities (state hospitals,
veterans' homes, and clinics) and to clinics owned or operated
by the state, cities, counties, and University of California
(UC) and health care districts.
In 2005, the State of California sought a five-year federal
waiver as a Medicaid demonstration project under the authority
of Section 1115(a) of the Social Security Act. In
fee-for-service Medi-Cal, the nonfederal share of Medi-Cal funds
for county and UC hospitals (known as Designated Public
Hospitals or DPHs) was shifted from the state GF to CPEs. This
allowed the state to reduce its GF spending, and allowed DPH
hospitals to receive cost-based reimbursement using their own
funds to draw down the required federal matching funds. This
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financing mechanism was continued in the 2010 successor
demonstration waiver.
Governmental Accounting Office (GAO) report on ambulance rates
A 2007 GAO report on ambulance rates entitled "Costs and
Expected Medicare Margins Vary Greatly" found that the costs of
ground ambulance transports were highly variable across
ambulance providers without shared costs, reflecting differences
in provider characteristics (an example of an ambulance provider
with shared costs would be an ambulance in a fire department,
where the cost of the ambulance is part of the overall cost of
the fire department). Costs per transport for ambulance
providers without shared costs averaged $415, but varied from
$99 to $1,218 per transport-a range of more than $1,100. The
GAO found ambulance providers without shared costs had higher
costs per transport, fewer transports per year typically, a
greater percentage of transports in which more than a basic
medical intervention occurred, more transports in rural counties
with lowest population density, lower productivity (measured as
number of transports furnished per staffed hour), and a greater
percentage of revenues from local tax support.
Related bills
AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, the
health budget trailer bill, among other provisions, reduces
Medi-Cal payments to providers by 10 percent, including medical
transportation rates, for dates of service on and after June 1,
2011, subject to federal approval, FFP, and the reduction
meeting federal Medicaid requirements.
SB 359 (Hernandez) would require DHCS, by July 1, 2012, to adopt
regulations establishing the Medi-Cal reimbursement rate for
ground ambulance services using one of two specified
methodologies. SB 359 was held on the Senate Appropriations
Committee suspense file.
Prior legislation
AB 2173 (Beall), Chapter 547, Statutes of 2010, established a $4
penalty on every vehicle code violation. The resulting revenue
is matched by federal funds and used to make supplemental
payments for emergency air medical transportation services in
the Medi-Cal Program.
AB 1932 (Hernandez) of 2010, in its final form, would have
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authorized DHCS to utilize certain service levels for
purposes of determining billing codes for emergency and
nonemergency BLS and ALS transportation and specialty care
transportation. If DHCS used the service levels to
determine billing codes, AB 1932 would have required DHCS
to adopt the definitions and Healthcare Common Procedure
Coding System codes for those service levels that have been
established by CMS, and to determine the above described
billing codes in a revenue-neutral manner. AB 1932 was
held on the Senate Appropriations suspense file.
AB 1174 (Hernandez) of 2009 would have required Medi-Cal to
cover emergency BLS and ALS services when a patient
reasonably believes that without immediate medical
attention, a serious health condition, as specified, could
reasonably result. In addition, AB 1174 would have
increased and established in statute maximum Medi-Cal
reimbursement rates for ambulance transportation services,
and would have required the rates be adjusted to reflect
changes in the California Consumer Price Index. AB 2257
(Hernandez) of 2008 was similar to AB 1147, except that AB
2257 also would have also increased Medi-Cal rates for air
ambulance providers. AB 1174 and AB 2257 were both held on
the Assembly Appropriations suspense file.
AB 511 (De La Torre) of 2010 would have imposed, as a
condition of participation in the Medi-Cal Program, a
quality assurance fee (QAF) on certain ambulance
transportation services providers, to be administered by
DHCS. The proceeds from the QAF would be required to be
deposited into the Medi-Cal Ambulance Transportation
Services Providers Fund (Fund). Moneys in the Fund would
be available only to enhance FFP for ambulance
transportation services under the Medi-Cal Program, or to
provide additional reimbursement to, and to support quality
improvement efforts of, ambulance transportation services
providers, including increased reimbursement for and
improvement of the quality of the provision of ALS
services, as defined. Held on the Senate Appropriations
suspense file; subsequently referred to Senate Health and
Senate Revenue and Taxation Committees. At the request of
the author, the bill was not heard in a policy committee
again.
AB 1153 (Beall) of 2009 would have levied an additional
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penalty of $3 upon every fine, penalty, or forfeiture
imposed and collected by the courts for all offenses
involving a vehicle violation, except certain parking
offenses, in each county. The resulting revenue would be
transferred to the state and continuously appropriated to
DHCS solely for the purposes of augmenting Medi-Cal
reimbursement paid to emergency air medical transportation
services providers. DHCS would be required to 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 services provider. AB 1153 was
held on the Senate Appropriations suspense file.
AB 959 (Frommer), Chapter 162, Statutes of 2006, expands
eligibility for supplemental Medi-Cal outpatient
reimbursements to state facilities (hospitals, veterans'
homes and clinics) and to clinics owned or operated by the
state, cities, counties, the University of
California and health care districts by enabling these
entities to drawn down additional federal funds using their
own funds as a CPE.
AB 915 (Frommer), Chapter 747, Statutes of 2002, provides
for the payment of a supplemental reimbursement to adult
day health centers and acute care hospitals owned by
certain public entities that provide specified services to
Medi-Cal beneficiaries. AB 915 makes provisions of
supplemental reimbursement under the bill subject to
necessary federal approvals, and requires that it be funded
wholly out of federal funds. It also makes the provisions
of the bill inoperative in the event, and on the date, of a
final judicial determination of any court of appellate
jurisdiction or a final determination by the administrator
of the federal CMS that the supplemental reimbursement must
be made to any facility not covered by the bill.
Arguments in support
The California Professional Firefighters (CPF), sponsors of
this bill, report that ambulance transports have increased
13 percent from 1997 to 2006, and ambulance transports of
Medi-Cal beneficiaries have increased 19 percent from 2006
to 2009. CPF also points out that Medicare rates were
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reduced 10 percent in 2010, representing a reduction of $35
million statewide and straining fire department budgets
even more. According to CPF, current Medi-Cal rates do not
cover the operating cost of a typical ambulance transport.
These unreimbursed costs are subsequently absorbed into a
fire department's general fund and paid for by the
taxpayers. In support of this bill, CPF points out that
DHCS has identified an existing federal program that
provides a 50 percent match on unreimbursed expenses.
According to the sponsor, the sooner this voluntary program
is up and running, the sooner local fire departments can
access much needed fiscal relief.
Oppose unless amended
The California Ambulance Association (CAA) writes that it
is opposed to this bill unless it is amended to include
private sector ambulance providers and to achieve a
statewide solution to underfunded Medi-Cal rates. CAA
states this bill would use the federal funds generated from
CPEs to fund public providers, even though both the public
and private sector ambulance providers in California suffer
from the same inadequate Medi-Cal reimbursement rates. CAA
states that, because federal regulations allow a statewide
solution, this bill should be amended to assure the entire
statewide emergency medical transportation services system
receives a desperately needed increase in Medi-Cal
ambulance funding, and that this bill as drafted will
preclude some communities from benefiting from the receipt
of federal funds.
PRIOR ACTIONS
Assembly Health: 18- 0
Assembly Appropriations:17- 0
Assembly Floor: 76- 1
COMMENTS
1. If the state enacts a supplemental payment program
based on CPEs, should private providers be able to receive
some of the resulting revenue? Both public and private
ground ambulance providers receive Medi-Cal rates that are
significantly below the amount paid by other payors. A GAO
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study found costs per transport for stand-alone ambulance
providers (for example, those without fire departments)
averaged $415, while CAA states the average Medi-Cal
reimbursement is $149 per transport.
However, CPE programs by their nature are voluntary for
government entities, and in order for a CPE program to be
successful, there has to be an incentive of the local
government entity to participate. For example, the state
originally required through the Medi-Cal administrative
activities (MAA) program (which enables local government to
draw down federal funds for administrative activities) that
local government agencies contribute to DHCS a portion of
the local government agency's GF (33.33 percent up to $20
million per fiscal year) made available due to the coverage
of administrative activities. That requirement was
eliminated because it deterred local government agencies
from participating in MAA. This bill is structured on
current state CPE programs for outpatient hospital services
and clinic services provided by state, county and UC
facilities, where the certifying government entities retain
the resulting federal funds in the form of higher rates.
Under CPEs, government entities claim federal funds for the
costs they incur above what Medi-Cal reimburses for a
particular service. While government entities are not
putting up additional funds under a CPE program (they are
claiming federal funds for their unreimbursed Medi-Cal
costs), it is unclear whether allowing private ambulance
providers to receive federal funds drawn down from the CPE
would affect public entities' willingness to claim CPEs.
In essence, public providers would incur the costs and
workload (filing cost reports to document the Medi-Cal
payment shortfall and the workload associated with any
audits) associated with CPEs, and would be sharing the
resulting federal funds with private providers. Finally,
if the proceeds of the CPE were used to increase Medi-Cal
rates generally (instead of only providing federal funds
for unreimbursed costs through CPEs), the state would
likely need to adjust all ambulance rates each year
depending upon participation in the CPE program and the
resulting revenue raised through CPEs. If on-going rate
adjustments occurred, federal approval through CMS would be
required.
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POSITIONS
Support: California Professional Firefighters (sponsor)
California Fire Chiefs Association
City of South Lake Tahoe
Cosumnes Fire Department
Fire Districts Association of California
League of California Cities
Long Beach Firefighters, Local 372
North Tahoe Fire Protection District
United Firefighters of Los Angeles City, Local
112
One individual
Oppose: California Ambulance Association (unless
amended).
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