BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 534    
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          |AUTHOR:        |Pan                                            |
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          |VERSION:       |April 6, 2015                                  |
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          |HEARING DATE:  |April 29, 2015 |               |               |
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          |CONSULTANT:    |Scott Bain                                     |
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           SUBJECT  :  Medi-Cal: ground emergency medical transportation  
          services: supplemental reimbursement

           SUMMARY  :  Requires the Department of Health Care Services (DHCS) to  
          design and implement an intergovernmental transfer program for  
          public Medi-Cal managed care ground emergency medical transport  
          services in order to increase Medi-Cal capitation payments to  
          Medi-Cal managed care plans for the purpose of increasing  
          Medi-Cal reimbursement to public ground emergency medical  
          transport services providers. Permits DHCS to provide  
          supplemental Medicaid reimbursement for the cost of paramedic  
          services at a rate of payment equal to cost through the use of  
          certified public expenditures. 
          
          Existing law:
          1.Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), which provides  
            health benefits to low-income who meet specified eligibility  
            criteria.

          2.Establishes a schedule of benefits under the Medi-Cal program,  
            which includes emergency and nonemergency medical  
            transportation.

          3.Allows ground emergency medical transportation services  
            providers owned by public entities (the state, a city, a  
            county, a city and county, a fire protection district, a  
            special district, a health care district or a federally  
            recognized Indian Tribe) that are enrolled in the Medi-Cal  
            program and that provide emergency medical transportation  
            services to Medi-Cal beneficiaries continuously through the  
            state fiscal year, to receive supplemental Medi-Cal  
            reimbursement, in addition to the rate of payment that the  







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            provider would otherwise receive for Medi-Cal ground emergency  
            medical transportation services.

          4.Makes participation in the program by a public ground  
            emergency medical transportation services provider voluntary.  
            Requires, if an applicable governmental entity elects to seek  
            supplemental reimbursement on behalf of a public ground  
            emergency medical transportation service provider, the  
            governmental entity to do all of the following:

                  a.        Certify, in conformity with the federal  
                    regulatory requirements, that the claimed expenditures  
                    for the ground emergency medical transportation  
                    services (known as certified public expenditures or  
                    CPEs) are eligible for federal financial participation  
                    (FFP);  
                  b.        Provide evidence supporting the certification  
                    as specified by DHCS, and submit data as specified by  
                    DHCS to determine the appropriate amounts to claim as  
                    expenditures qualifying for FFP; and, 
                  c.        Keep, maintain, and have readily retrievable,  
                    any records specified by DHCS to fully disclose  
                    reimbursement amounts to which the public emergency  
                    medical transportation provider is entitled, and any  
                    other records required by the federal Centers for  
                    Medicare and Medicaid Services (CMS).

          5.Establishes requirements for how the supplemental  
            reimbursement is calculated and paid. 

          6.Requires the non-federal share of the supplemental  
            reimbursement submitted to CMS for purposes of claiming FFP to  
            be paid only with funds from the governmental entities that  
            are certified to the state.

          7.Requires DHCS, with specified exemptions, to assess a fee of  
            20 percent on each intergovernmental transfer (IGT) used in  
            Medi-Cal managed care setting to reimburse DHCS for the  
            administrative costs of operating the IGT program and for the  
            support of the Medi-Cal program.
          
          This bill:
          1.Permits DHCS, to the extent permitted under federal law and  
            regulations, to provide supplemental reimbursement for the  
            cost of paramedic services at a rate of payment equal to cost  








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            through the use of CPEs.

          2.Requires DHCS to design and implement, in consultation with  
            eligible providers, an IGT program relating to Medi-Cal  
            managed care ground emergency medical transport services in  
            order to increase capitation payments for the purpose of  
            increasing Medi-Cal reimbursement to eligible providers.

          3.Defines "eligible providers" as providers of ground emergency  
            medical transport services that:

                  a.        Are owned or operated by the state, a city,  
                    county, city and county, fire protection district,  
                    special district, community services district, health  
                    care district, or a federally recognized Indian tribe;  
                    and,
                  b.        Provide ground emergency medical transport  
                    services to Medi-Cal managed care enrollees pursuant  
                    to a contract or other arrangement with a Medi-Cal  
                    managed care plan.

          4.Requires DHCS to make increased capitation payments to  
            applicable Medi-Cal managed care plans for covered ground  
            emergency medical transportation services to the extent IGTs  
            are voluntarily made by, and accepted from, an eligible  
            provider, or a governmental entity affiliated with an eligible  
            provider.

          5.Requires the increased capitation payments to be in amounts  
            actuarially equivalent to the supplemental fee-for-service  
            payments available for eligible providers under existing law,  
            to the extent permissible under federal law.

          6.Requires all funds associated with IGTs made and accepted  
            under this bill to be used to fund additional payments to  
            eligible providers.

          7.Requires Medi-Cal managed care plans to pay 100 percent of any  
            amount of increased capitation payments made under this bill  
            to eligible providers for providing and making available  
            ground emergency medical transportation services pursuant to a  
            contract or other arrangement with a Medi-Cal managed care  
            plan.

          8.Requires the IGT program developed under this bill to be  








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            implemented on January 1, 2016, or a later date if otherwise  
            required pursuant to any necessary federal approvals obtained,  
            and only to the extent IGTs from the eligible provider, or the  
            governmental entity with which it is affiliated, are provided  
            for this purpose. Permits DHCS to implement the IGT and  
            increased capitation payments under this bill on a retroactive  
            basis as needed, to the extent federal approval is obtained.

          9.Makes participation in the IGT under this bill voluntary on  
            the part of the transferring entities for purposes of all  
            applicable federal laws.

          10.Requires the IGT provisions to be implemented without any  
            additional expenditure from the General Fund.

          11.Requires each eligible provider, or the governmental entity  
            affiliated with an eligible provider, to agree to reimburse  
            DHCS for any costs associated with implementing this bill. 

          12.Prohibits IGTs made under this bill from being subject to the  
            20 percent administrative fee required to be assessed under  
            existing law.

          13.Requires, as a condition of participation in the IGT program  
            under this bill, Medi-Cal managed care plans, eligible  
            providers, and governmental entities affiliated with eligible  
            providers to agree to comply with any requests for information  
            or similar data requirements imposed by DHCS for purposes of  
            obtaining supporting documentation necessary to claim federal  
            funds or to obtain federal approvals.

          14.Implements the IGT program only if and to the extent federal  
            financial participation is available and is not otherwise  
            jeopardized, and any necessary federal approvals have been  
            obtained.

          15.Grants the DHCS director the discretion to return or not  
            accept an IGT, and to adjust payments made under this bill as  
            necessary to comply with federal Medicaid requirements, to the  
            extent the DHCS director determines that the payments made  
            under the IGT program under this bill do not comply with  
            federal Medicaid requirements.

          16.Permits, to the extent federal approval is obtained, the  
            increased capitation payments under this bill to commence for  








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            dates of service on or after January 1, 2016.

          17.Permits the authority to implement, interpret, or make  
            specific this bill by means of all-county letters, plan  
            letters, plan or provider bulletins, or similar instructions,  
            without taking regulatory action under the Administrative  
            Procedure Act.

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1.Author's statement. According to the author, much of  
            California's population receives emergency ambulance services  
            from local governments. Many Californians relay on the state  
            Medi-Cal program to provide for their medical care, of which  
            emergency ambulance service is a vital part of the health care  
            safety net. The Medi-Cal program, although an important part  
            of keeping California, healthy falls short of meeting the true  
            cost of providing that vital emergency ambulance service. The  
            average Medi-Cal reimbursement for emergency ambulance  
            transport across the state is approximately $120 while the  
            cost to provide those services can range from $498 - $1,200  
            depending on region. With the downturn in the economy, many of  
            California's public emergency ambulance providers have seen  
            significant and drastic financial cuts that have negatively  
            impacted their ability to provide both the fire protection and  
            emergency medical services their communities have relied and  
            become accustomed too. This bill will allow qualified public  
            ground emergency transportation providers to draw down federal  
            matching funds to help offset the gap between the amounts paid  
            through Medi-Cal and the true cost of providing those  
            services. This amount, estimated at nearly $350 million  
            dollars annually will flow back into local government public  
            safety and allow the continued provision of those services the  
            public enjoys. This bill will accomplish this at no cost to  
            the state General Fund.
          

          2.Federal Medicaid regulations and CPEs and IGTs as the  
            non-federal share. Federal Medicaid regulations permit both  
            state and local governments to participate in the financing of  
            the non-federal portion of medical assistance expenditures.  
            CPEs are one of several mechanisms that a state may employ to  
            obtain FFP and to make supplemental payments to Medi-Cal  








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            providers without cost to the General Fund (GF). Under AB 678  
            (Pan), Chapter 397, Statutes of 2011, state and local entities  
            have the option to claim FFP for the difference between the  
            Medi-Cal reimbursement rate and the actual cost of providing  
            the service. Under a CPE arrangement, government providers  
            certify their Medicaid expenditures to the state, and the  
            state then obtains federal reimbursement on the basis of these  
            CPEs. Medicaid law allows states to finance the non-federal  
            share of payments with CPEs as long as the funds are derived  
            from state or local tax revenue and are certified by units of  
            local or state government as eligible for federal  
            reimbursement. 


          Federal approval of the ground emergency medical transportation  
            State Plan Amendment (SPA) was granted in September 2013 for  
            services provided to Medi-Cal beneficiaries on or after  
            January 30, 2010. The supplemental reimbursement authorized by  
            the SPA are for uncompensated care costs incurred by eligible  
            providers for providing ground emergency medical  
            transportation services to Medi-Cal beneficiaries for costs  
            that are in excess of the payment made to each provider for  
            services providing to Medi-Cal beneficiaries.

          Another source of funds for the state share is IGTs, which is  
            the source of funds authorized under this bill. IGTs are  
            transfers of public funds between governmental entities, such  
            as from a county to the State. One source of the funding used  
            for the transfer is local tax dollars. This bill would also  
            allow local governmental entities the option of using IGTs as  
            the state share to draw down FFP in Medi-Cal. Both CPEs and  
            IGTs allow the state to reduce its GF spending, and allow  
            local governments to receive additional Medicaid funds using  
            their own funds to draw down federal funds.
          

          3.Governmental Accounting Office (GAO) report on ambulance  
            rates. A 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  








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            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, but 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 lower population density, lower productivity  
            (measured as number of transports furnished per staffed hour),  
            and a greater percentage of revenues from local tax support.

          

          4.Prior legislation. AB 2577 (Cooley and Pan), of 2014, was  
            similar to this bill. AB 2577 was vetoed by the Governor. In  
            his veto message, the Governor stated that while he supported  
            funding mechanisms that would increase the availability of  
            federal funds, AB 2577 presented significant policy and  
            implementation challenges at a time when DHCS is working at  
            full capacity on several new and critical priorities  
            integrating the Affordable Care Act into the state's health  
            care system. The Governor's veto message directed DHCS to  
            continue conversations on this funding mechanism that reflects  
            a more realistic time frame and is more workable for DHCS.


          SB 1374 (Hernandez), of 2014, would have required 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 suspense file.

          AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, the  
            health budget trailer bill, among other provisions, reduces  
            Medi-Cal payments to providers by 10 percent, including  
            medical transportation rates, for dates of service on and  
            after June 1, 2011, subject to federal approval, FFP, and the  
            reduction meeting federal Medicaid requirements. The 2014-2015  
            Governor's budget proposes to exempt certain classes of  
            providers and services from the retroactive recoupments,  
            including medical transportation, but these providers are  
            subject to the rate reduction.

            SB 359 (Hernandez), of 2011, would have required DHCS, by July  
            1, 2012, to adopt regulations establishing the Medi-Cal  
            reimbursement rate for ground ambulance services using one of  








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            two specified methodologies. SB 359 was held on the Senate  
            Appropriations Committee suspense file.


            AB 2173 (Beall), Chapter 547, Statutes of 2010, established a  
            $4 penalty on every vehicle code violation. The resulting  
            revenue is matched by federal funds and used to make  
            supplemental payments for emergency air medical transportation  
            services in the Medi-Cal Program.


            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 Support (BLS) and Advanced Life Support (ALS)  
            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.


            AB 1174 (Hernandez), of 2009, would have required Medi-Cal to  
            cover emergency BLS and  ALS 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 statute maximum Medi-Cal reimbursement rates  
            for ambulance transportation services, and would have required  
            the rates be adjusted to reflect changes in the California  
            Consumer Price Index. AB 2257 (Hernandez), of 2008, was  
            similar to AB 1147, 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.


            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.  The proceeds  
            from the QAF would be required to be deposited into the  








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            Medi-Cal Ambulance Transportation Services Providers Fund  
            (Fund).  Moneys in the Fund would be available only to enhance  
            FFP for ambulance transportation services under the Medi-Cal  
            Program, or to provide additional reimbursement to, and to  
            support quality improvement efforts of, ambulance  
            transportation services providers, including increased  
            reimbursement for and improvement of the quality of the  
            provision of ALS services, as defined.  AB 511 was held on the  
            Senate Appropriations suspense file; 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.  

          5.Related legislation. SB 243 (Hernandez), and AB 366 (Bonta),  
            would increase Medi-Cal provider rates, including increase  
            Medi-Cal transportation provider rates to Medicare levels. 

          AB 1257 (Gray), requires DHCS to establish payment rates for  
            ground ambulance services based on changes in the Consumer  
            Price Index-Urban  and the California weighted average  
            Geographic Practice Cost Index, and to designate the ambulance  
            cost study conducted by the federal Government Accountability  
            Office described above as the evidentiary base. AB 1257 is  
            scheduled for hearing in the Assembly Health Committee on  
            April 28, 2015.

          6.Support. This bill is co-sponsored by the California Fire  
            Chiefs Association, the California Metro Fire Chiefs, and the  
            California Professional Firefighters which states that, as  
            Medi-Cal beneficiaries move from fee-for-service to Medi-Cal  
            managed care plans, much of the anticipated additional  
            reimbursement from the recently enacted CPE program will  
            disappear as CPEs cannot be used for obtaining the  
            supplemental reimbursement for the Medi-Cal managed care  
            population. The sponsors argue that this bill will allow those  
            entities that provide ground emergency medical transportation  
            to capture additional reimbursements for Medi-Cal managed care  
            beneficiaries through the use of an IGT. This will allow  
            public agency providers to seek partial reimbursement for  
            their share of unreimbursed Medi-Cal ground transportation  
            expenses via funding provided by the federal government as  
            existing Medi-Cal rates do not cover the operating cost of a  
            typical ambulance transport. 

          The California State Firefighters' Association (CSFA) writes in  








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            support that this bill will bring millions of dollars to  
            cash-strapped communities to provide emergency medical  
            transportation services.

          7.Bill implementation date. This bill requires the IGT program  
            developed under this bill to be implemented on January 1,  
            2016, or a later date if otherwise required pursuant to any  
            necessary federal approvals obtained. The Governor's veto  
            message directed DHCS to continue conversations on this  
            funding mechanism that reflects a more realistic time frame  
            and is more workable for DHCS. The author may wish to consider  
            moving back the IGT program to a date later than January 1,  
            2016 as this bill does not take effect until that date and in  
            light of the Governor's veto message.

           SUPPORT AND OPPOSITION  :
          Support:  California Fire Chiefs Association (co-sponsor)
                    California Metro Fire Chiefs (co-sponsor)
                    California Professional Firefighters (co-sponsor)
                    Association of California Healthcare Districts
                    California State Firefighters' Association
                    Paramedics Plus
                    
          Oppose:   None received


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