BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1257


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          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  








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            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. 








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          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.









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             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.










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             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        |               |             |              |








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           |------------------+---------------+-------------+--------------|
           |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; 











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               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  








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               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  








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               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  








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               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









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          None on file.




          Analysis Prepared by:An-Chi Tsou / HEALTH / (916) 319-2097