BILL ANALYSIS Ó
AB 1257
Page 1
Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 1257
(Gray) - As Amended March 26, 2015
SUBJECT: Medi-Cal: ground ambulance rates.
SUMMARY: Requires the Department of Health Care Services (DHCS)
to establish payment rates for ground ambulance services using
specified indices and evidence. Specifically, this bill:
1)Requires DHCS to establish payment rates for ground ambulance
services based on changes in both the Consumer Price Index for
All Urban Consumers (CPI-U) and the California weighted
average Geographic Practice Cost Index (GPCI).
2)Requires DHCS to use the 2007 ambulance cost study conducted
by the federal Government Accountability Office (GAO) as the
evidentiary basis for the payment rates.
EXISTING LAW:
1)Establishes the Medi-Cal program to provide comprehensive
health benefits to low-income individuals who meet specified
AB 1257
Page 2
eligibility criteria.
2)Establishes a schedule of benefits to be covered by the
Medi-Cal program, including emergency and non-emergency
transportation services.
3)Establishes, through regulation, maximum Medi-Cal
reimbursement rates for medical transportation services, and
prohibits bills from exceeding charges made to the general
public.
4)Requires DHCS to annually review Medi-Cal reimbursement rates
for physicians and dental services, accounting for factors
such as annual cost increases, based on the CPI.
FISCAL EFFECT: This bill has not yet been analyzed by the
fiscal committee.
COMMENTS:
1)PURPOSE OF THIS BILL. The author states that unlike other
healthcare providers, emergency ambulance providers are
mandated to provide emergency services regardless of the
patient's ability to pay. Consequently, the author explains,
emergency ambulance providers deliver significant levels of
uncompensated care California residents. The author contends
there is presently no relationship between the current
Medi-Cal payment system and the actual costs associated with
delivering ambulance services, and that Medi-Cal ambulance
reimbursement rates must ultimately be increased to cover the
cost of medically necessary services delivered to Medi-Cal
recipients. The author concludes this bill modernizes the
Medi-Cal ambulance payment system to assure adequate funding
for the state's ambulance services.
AB 1257
Page 3
2)BACKGROUND.
a) Medi-Cal rates for ambulance services. According to the
Medi-Cal policy manual, Medi-Cal covers ambulance and other
medical transportation only when ordinary public or private
conveyance is medically contra-indicated and transportation
is required to obtain needed medical care. To receive
reimbursement, a recipient must be eligible for Medi-Cal on
the date of service. Ambulance providers are instructed to
use the ambulance service Basic Life Support (BLS) base
rate when billing for responses to an emergency "911" call.
In addition to the base rate, Medi-Cal provides additional
funding for mileage, night calls, extra attendants, waiting
times, certain supplies and services, and a separate
reimbursement rate for non-emergency transportation for a
single patient.
According to DHCS, the Medi-Cal base rate for BLS ambulance
services for daytime calls was $118.20 in 1999 and remains
unchanged. Non-emergency transportation for one patient
$107.16 in 1999 and has also remained unchanged. Mileage
was $3.55 per mile in 1999, and $3.55 per mile remains the
current rate.
Pursuant to AB 97 (Committee on Budget), Chapter 3,
Statutes of 2011, Medi-Cal provider rates were reduced by
10% for dates of services on and after June 1, 2011,
subject to federal approval, and federal financial
participation. This rate reduction was blocked by court
action for many providers, but it took effect for ambulance
providers in September 2013. DHCS has announced ambulance
providers would not be subject to a retroactive recoupment
of their rates.
AB 1257
Page 4
b) GAO report on ambulance rates. This bill requires DHCS
to establish payment rates for ground ambulance services
based on changes in the CPI-U and the California weighted
average GPCI, designating a federal GAO report as the
evidentiary basis. The referenced 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. The GAO found
ambulance providers without shared costs had higher costs
per transport typically had fewer transports per year, 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.
c) CPI-U. The CPI-U is a measure that examines the changes
in the price of a basket of goods and services purchased by
urban consumers. The urban consumer population is deemed
by many as a better representative measure of the general
public because most of the country's population lives in
highly populated areas, which represent close to 90% of the
total population. The CPI is the most frequently used
statistic for identifying inflation or deflation. All
variants of the CPI are cost of living indexes assessing
prices in the market based on different bundles of goods
and services.
AB 1257
Page 5
d) California weighted average GPCI. The Centers for
Medicare and Medicaid Services (CMS) bases physician fee
schedules on Relative Value Units (RVUs), including
physician work (i.e. cost of living), physician expense
(i.e. cost of practice), and the cost of malpractice
insurance. However, the location of physicians' practices
also affects their cost of providing services. For
example, the cost of living for physicians is higher in New
York City than in Utah; the cost of operating a physician
practice is higher in San Francisco, California than in
Sandusky, Ohio; and purchasing malpractice insurance is
more expensive for a physician in Miami, Florida than for a
doctor in Minneapolis, Minnesota. To account for such
geographic differences in the inputs required to provide
medical services, CMS uses GPCIs to adjust Medicare
physician payments based on geographic differences in
physician wages, practice expenses, and the price of
malpractice insurance. CMS first implemented the GPCIs as
part of the Medicare Physician Fee Schedule in 1992 and
requires the GPCIs to be updated at least every three
years. The 2015 California GPCIs are as follows:
---------------------------------------------------------------
| Location | Work - RVU | Physician |Malpractice - |
| | | Expense - | RVU |
| | | RVU | |
| | | | |
| | | | |
|------------------+---------------+-------------+--------------|
| Anaheim/Santa | 1.035 | 1.216 | 0.908 |
| Ana, CA | | | |
|------------------+---------------+-------------+--------------|
| Los Angeles, CA | 1.047 | 1.161 | 0.908 |
|------------------+---------------+-------------+--------------|
|Marin/Napa/Solano,| 1.059 | 1.286 | 0.496 |
| CA | | | |
AB 1257
Page 6
|------------------+---------------+-------------+--------------|
|Oakland/Berkeley, | 1.061 | 1.260 | 0.457 |
| CA | | | |
|------------------+---------------+-------------+--------------|
|San Francisco, CA | 1.079 | 1.388 | 0.457 |
|------------------+---------------+-------------+--------------|
| San Mateo, CA | 1.079 | 1.372 | 0.416 |
|------------------+---------------+-------------+--------------|
| Santa Clara, CA | 1.088 | 1.347 | 0.416 |
|------------------+---------------+-------------+--------------|
| Ventura, CA | 1.030 | 1.180 | 0.834 |
|------------------+---------------+-------------+--------------|
| Rest of | 1.027 | 1.083 |0.658 |
| California | | | |
---------------------------------------------------------------
The current language of the bill is unclear if the California
weighted average GPCI required in the provisions is simply a
mean of the GPCIs listed above or if there is a different
preferred method of calculation.
For Medicare payments applicable to ground ambulance services,
the fee schedule amount includes primarily:
i) A money amount that serves as a nationally uniform
base rate, called a "conversion factor" (CF), for all
ground ambulance services;
ii) An RVU assigned to each type of ground ambulance
service;
AB 1257
Page 7
iii) A geographic adjustment factor (GAF) for each
ambulance fee schedule locality area (GPCI);
iv) A nationally uniform loaded mileage rate; and,
v) An additional amount for certain mileage for a rural
point-of-pickup.
1)SUPPORT. The California Primary Care Association, Paramedics
Plus, and other supporters of this bill state the bill will
help increase access to patients for emergency transport when
it is necessary, in addition to establishing payment rates
that are more in line with the economic realities of current
emergency medical services costs.
2)PREVIOUS LEGISLATION.
a) SB 1374 (Ed Hernandez) of 2014 would have required the
DHCS, by July 1, 2015, to adopt regulations establishing
the Medi-Cal reimbursement rate for ground ambulance
services using one of two specified methodologies. SB 1374
was held on the Senate Appropriations Committee Suspense
File.
b) SB 359 (Ed Hernandez) of 2011 was similar to this bill
in that it would have required 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 designated one of the two
methodologies as 120% of the Medicare ambulance fee
schedule. SB 359 was held on the Senate Appropriations
AB 1257
Page 8
Committee Suspense File and was later amended for another
purpose.
c) AB 678 (Pan), Chapter 397, Statutes of 2011, establishes
a supplemental payment program for governmental entity
providers of Medi-Cal emergency medical transportation
services, based on certified public expenditures using
state or local governmental entities' funds as the required
federal match.
d) AB 2173 (Beall), Chapter 547, Statutes of 2010,
established a $4 penalty on every vehicle code violation.
The resulting revenue would be matched by federal funds and
used to make supplemental payments for emergency air
medical transportation services in the Medi-Cal program.
e) AB 1932 (Hernandez) of 2010 in its final form, would
have authorized DHCS to utilize certain service levels for
purposes of determining billing codes for emergency and
non-emergency basic life and advanced life support
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.
f) AB 1174 (Hernandez) of 2009 would have required Medi-Cal
to cover emergency basic life support and advanced life
support 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
AB 1257
Page 9
statute maximum Medi-Cal reimbursement rates for ambulance
transportation services, and would have required the rates
be adjusted to reflect changes in the California CPI. AB
2257 (Hernandez) of 2008 was similar to AB 1174, 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.
g) 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 and used to increase rates. AB 511 was held on the
Senate Appropriations Suspense File; it was 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.
3)POLICY COMMENTS.
a) Should Medi-Cal rates for ground ambulance services be
changed? This bill addresses an important issue in that
provider payment rates in Medi-Cal are a key factor in
beneficiaries' ability to access program services and the
ability of providers to continue to provide services. In
addition, Medi-Cal ambulance providers, as part of the 911
emergency response system, are unable to "opt out" of
providing services to Medi-Cal beneficiaries. Medi-Cal
reimbursement rates for ambulances, as well as for many
other provider types, are significantly less than Medicare
rates, and rates were reduced by 10% beginning September
2013.
b) Are both indices necessary to calculate the rates? This
bill requires DHCS to establish payment rates on two
indices: the CPI-U and the California weighted average
GPCI. The CPI-U accounts for a change in cost of a set of
general goods in urban areas. CMS currently factors for
differences in more specific costs of provider practice
AB 1257
Page 10
using the GPCI. The GPCIs released by CMS already account
for large urban areas within California. Thus, the
Committee may wish to consider whether both indices are
necessary in order to establish payment rates for ground
ambulance services, or if the CMS-released
California-specific GPCIs are sufficient for the purposes
of this bill.
c) Should the GAO report be used to help set rates for
ambulance services? Medi-Cal reimbursement rates in
California are among the lowest in the nation. This bill
appears to address fee-for-service rates for those that
deliver ambulance services, in part by requiring DHCS to
use the 2007 GAO report on ambulance rates to establish the
provider rates for these services. However, existing state
and federal regulations already outline specific criteria
and protocols for setting Medi-Cal reimbursement rates. It
is unclear how the report would be used to help set the
rates, given the need to comply with existing state and
federal requirements. The Committee may wish to consider
whether it is appropriate to use the report as one of the
factors for establishing these provider rates.
REGISTERED SUPPORT / OPPOSITION:
Support
911 Ambulance Provider's Medi-Cal Alliance
California Primary Care Association
California State Firefighters' Association
Paramedics Plus
Opposition
AB 1257
Page 11
None on file.
Analysis Prepared by:An-Chi Tsou / HEALTH / (916) 319-2097