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 _________________________________________________________________ ____ 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. _________________________________________________________________ ____ 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 _________________________________________________________________ ____ 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 AB 678 (Pan) Page 1 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 AB 678 (Pan) Page 2 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. AB 678 (Pan) Page 3 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.