BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 678 (Pan)
Hearing Date: 8/25/2011 Amended: 8/15/2011
Consultant: Katie Johnson Policy Vote: Health 8-0
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BILL SUMMARY: AB 678, an urgency measure, would permit publicly
owned or operated ground emergency medical transportation
services to utilize a certified public expenditure (CPE) process
to access new federal funds and subsequently receive
supplemental Medi-Cal payments.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Supplemental Medi-Cal potentially in the tens of millions of
dollars Federal
payments to providers annually upon federal approval
DHCS administration $150 $300 $300 Local/*
of the program Federal
*50 percent local funds, 50 percent federal funds
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STAFF COMMENTS: SUSPENSE FILE.
DHCS Administration
This bill would establish a new supplemental payment program for
publicly owned or operated providers of ground emergency medical
transportation services; providers would include those owned or
operated by the state, a city, a county, a city or a county, a
special district, a community services district, a health care
district, or a federally recognized Indian tribe. Provider
participation in the program would be voluntary and payment
would be above and beyond the provider's current Medi-Cal
reimbursement.
The state Medicaid agency, the Department of Health Care
Services (DHCS), would be required to seek all necessary federal
approvals, and, after obtaining federal approvals for the
program, make all applicable payments. If federal approval is
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obtained, it is possible that reimbursement could date back to
October 1, 2009, FY 2009-2010, since DHCS has a placeholder
state plan amendment filed with the Centers for Medicare and
Medicaid Services for this bill's purpose. DHCS would likely
need to establish a process by which it would certify a
provider's expenditures in a manner sufficient to meet federal
requirements at an expense of approximately $300,000 annually
for staff for the program and accounting and legal services.
Actual staffing costs could potentially be more or less
depending on the number of providers that choose to participate.
This bill would provide that DHCS' administrative expenditures
would be reimbursed by participating providers. Costs would be
shared 50 percent local funds and 50 percent federal funds. This
bill would state that it is the Legislature's intent to not
implement these provisions with General Fund monies.
Supplemental Payments
In order to receive a supplemental payment for services rendered
to a Medi-Cal beneficiary, a provider would certify that it
spent X amount of funds on that service, that it received Y
reimbursement from Medi-Cal, and that Z amount of the total cost
was uncompensated by Medi-Cal. For example, if the actual cost
of an ambulance transport for a Medi-Cal beneficiary was $100,
then a provider would certify that it spent $100 on a transport,
that it received $60 in Medi-Cal reimbursement (50 percent
General Fund, 50 percent federal funds), and that there was a
remainder of $40 in uncompensated cost. The provider would
receive $20 of that $40 as a reimbursement from the federal
government in the form of a supplemental payment provided for in
this bill.
Supplemental payments would be made on a "per transport" basis.
Although the actual amount of supplemental payments is unknown,
it is reasonable to assume that a provider would work to receive
additional reimbursement. The California Ambulance Association
states that there are about 715 providers in the state, of which
about 77 percent are fire departments. According to the sponsors
of this bill, the California Professional Firefighters, it is
estimated that about 130 fire departments would be eligible to
receive reimbursement pursuant to this bill, among other public
providers. The percentage of total transports provided by
publicly-owned or operated ground emergency transportation
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services is unknown.
An ambulance cost study conducted by the Federal Government
Accountability Office in 2007 (GAO-07-383) found that the per
transport cost for ambulance providers without shared costs
averaged $415, but varied from $99 to $1,218 per transport, a
variation of more than $1,100. With an 18 percent weighted
inflation adjustment used by Medicare, the actual costs would be
$592 today. Medi-Cal base rates, established in 1999 in Section
51527 of Title 22 of the California Code of Regulations, for
emergency basic life support services is $118.20 and for
non-emergency services is $107.16. Additionally, ambulances may
claim $3.55 per mile of transport one-way, as well as various
other specified rate augmentations. In AB 97 (Committee on
Budget), Chapter 3, Statutes of 2011, ground ambulance rates,
along with those of several other categories of providers, were
reduced by 10 percent commencing June 1, 2011, subject to
federal approval. If the federal government approves the rate
reductions, the base ground ambulance service rates for
emergency and non-emergency services would be $106.38 and
$96.44, respectively.
The cost differential between the actual cost of service
($592.00) and average Medi-Cal reimbursement ($118.20) per
transport is $473.80 or $485.62 with the 10 percent reduction.
In 2009, there were about 292,000 transports of Medi-Cal
fee-for-service patients at a Medi-Cal cost of approximately $44
million. The California Ambulance Association estimates that
there were an additional 171,000 ambulance transports reimbursed
through Medi-Cal managed care plans in 2009 at a cost of about
$26 million. This bill would only apply to fee-for-services
providers.
Potential costs of this bill are estimated as follows: assume 1)
292,000 fee-for-service transports annually, 2) uncompensated
costs eligible for CPEs of $473.80 or $485.62 with the 10
percent reduction, and 3) 50 percent of uncompensated costs
equals the amount of federal fund reimbursement. Using these
assumptions, there would be approximately $70 million in
additional federal funds available, assuming 100 percent of
transports were made by public providers. If public providers
conducted 20 percent or 50 percent of Medi-Cal ground
transportation emergency services, $14 million or $35 million
federal funds would be available for supplemental reimbursement.
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These numbers are illustrative estimates and actual costs would
vary based on 1) actual Medi-Cal reimbursement, 2) the
percentage of Medi-Cal emergency transports provided by public
providers, and 3) the actual number of public providers that
would participate in the program.