BILL ANALYSIS Ó
AB 1257
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1257 (Gray) - As Amended March 26, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires the Department of Health Care Services (DHCS)
to establish payment rates for ground ambulance services using
specified indices and evidence. Specifically, this bill:
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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.
FISCAL EFFECT:
1)Estimated annual increased costs of $215 million (GF/federal),
assuming $415 per transport is used as the 2007 "evidentiary
base" for establishing an ambulance rate, and adjusting for
the GPCI, as well as CPI-U growth since 2007.
2)Annual cost increases in the range of $5-10 million per year
(GF/federal), depending on changes in the CPI-U.
3)Because there are nine different GPCIs that apply to different
areas of the state, DHCS may incur unknown administrative and
information technology systems costs to pay differential rates
in different locations.
4)With the adjustments required in this bill, ambulance rates
would increase by $367, from $150 on average (before
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accounting for 10% payment reductions) to $517 in 2016, a 245%
increase.
COMMENTS:
1)Purpose. This bill is intended to increase Medi-Cal
ambulance rates to better reflect the cost of doing business,
given ambulance providers have a legal mandate to respond to
all calls. This bill is supported by ambulance providers and
first responders.
2)Costs Versus Medi-Cal Payments. The average $150 Medi-Cal
payment rate per transport, even excluding the 10% payment
reduction discussed below, is 32% of the median 2012 Medicare
payment of $464. Accounting for the 10% cuts puts payments at
about 29% of Medicare rates. This compares poorly even with
Medi-Cal's low FFS payment rates, which average $51% of
Medicare levels across all services. A 2012 GAO study found
the median cost per transport was $429 nationally.
3)Recent Payment Reduction. 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.
4)Payment Adjustments. 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.
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The referenced 2007 GAO report on ambulance rates, entitled
"Costs and Expected Medicare Margins Vary Greatly," cites
costs per transport for ambulance providers averaged $415, but
varied from $99 to $1,218 per transport. The CPI-U is a
measure that examines the changes in the price of a basket of
goods and services purchased by urban consumers, and has
averaged about 2% over the last decade. The GPCI is an
adjustment Medicare uses to adjust payments based on local
cost of doing business. There are nine values specific to
different areas of California based on differences in costs,
which provide for an average 13% increase to base Medicare
rates.
5)Prior 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
Committee Suspense File and was later amended for another
purpose.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
AB 1257
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