BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 534 (Pan) - Medi-Cal: ground emergency medical transportation
services: supplemental reimbursement.
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|Version: May 5, 2015 |Policy Vote: HEALTH 9 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 534 would authorize government entities to make
intergovernmental transfers of funds to the state in order to
draw down additional federal funding to offset the unreimbursed
costs of providing ground emergency medical transportation
services to Medi-Cal beneficiaries.
Fiscal
Impact:
One-time costs up to $1 million to get federal approvals and
set up the program requirements by the Department of Health
Care Services (reimbursements and federal funds). Current law
requires participating government entities to reimburse the
Department for any administrative costs to administer the
program.
SB 534 (Pan) Page 1 of
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Ongoing costs, potentially up to $500,000 per year, to
administer the program and facilitate payments to managed care
plans (which would then be paid to government entities)
(reimbursements and federal funds).
Potential increase in federal funding to government emergency
services providers in the tens of millions per year (local
funds). Under current law, government entities can use a
similar system to receive additional federal funding based on
their actual expenditures to cover uncompensated costs for
providing emergency transportation services in fee-for-service
Medi-Cal. Under that program, annual revenues to government
entities are projected to be about $25 million per year. This
bill will allow government entities to receive supplemental
federal funding for managed care beneficiaries. About 80% of
Medi-Cal beneficiaries are in managed care. While actual
reimbursements to government entities will depend on the
amount of intergovernmental transfers and the maximum
allowable payments for services, total additional
reimbursements under the bill could be several times the
reimbursements allowed for similar services provided in the
fee-for-service system.
Background: Under state and federal law, the Department of Health Care
Services operates the Medi-Cal program, which provides health
care coverage to low income individuals, families, and children.
Medi-Cal provides coverage to childless adults and parents with
household incomes up to 138 percent of the federal poverty level
and to children with household incomes up to 266 percent of the
federal poverty level. The federal government provides matching
funds that vary from 50 percent to 90 percent of expenditures
depending on the category of beneficiary.
The rates that the Medi-Cal program pays ambulance providers
(both private companies and public agencies) have not kept up
with increasing costs over the years. In addition, Medi-Cal
providers, including ground ambulance providers, are subject to
a 10 percent rate reduction pursuant to AB 97 (Committee on
Budget, Statutes of 2011). This rate reduction went into effect
in September 2013. However, unlike some providers, ground
ambulance providers will not be subject to retroactive cuts to
recoup the savings that the state did not achieve while AB 97
was under court injunction from 2011 to September 2013.
SB 534 (Pan) Page 2 of
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Under federal law, there are two methods for government entities
to receive additional federal reimbursement for Medicaid
expenditures, when the amount of non-federal funding from a
state does not fully cover the cost of providing services.
Government can receive additional federal funding when they
demonstrate that they made "certified public expenditures" to
cover the shortfall between their actual cost to provide
services to Medicaid beneficiaries and the reimbursement rates
that they received from their state. Current state and federal
law allows government entities to use this system to receive
additional reimbursement of emergency ground ambulance
transportation provided through the Medi-Cal fee-for-service
system. Federal law does not allow certified public expenditures
to be used to receive additional federal funding for services
provided through managed care.
Federal law also allows government entities to use
"intergovernmental transfers" to draw down additional funding
for the shortfall between expenditures by government entities
and the rates paid by state Medicaid programs. Under an
intergovernmental transfer system, a government entity transfers
funding to the Department of Health Care Services. The
Department uses those funds to draw down federal matching funds
and then remits those funds to the government entity. In the
fee-for-services system, both the intergovernmental transfer
funds and the additional federal funds are remitted directly to
the government entity. In the managed care system, the funds are
paid to the managed care plan, which then makes supplemental
payments to the government entity. Federal law allows
intergovernmental transfers to supplement payments for ground
emergency medical services in the Medi-Cal managed care system.
Proposed Law:
SB 534 would authorize government entities to make
intergovernmental transfers of funds to the state in order to
draw down additional federal funding to offset the unreimbursed
costs of providing ground emergency medical transportation
services to Medi-Cal beneficiaries.
The bill would specify the process and timelines for making
intergovernmental transfers to the state and the subsequent
payments to managed care plans and government entities.
SB 534 (Pan) Page 3 of
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Related
Legislation: AB 2577 (Cooley and Pan) was identical to this
bill. That bill was vetoed by Governor Brown.
Staff
Comments: Currently, the state pays on average $150 for ground emergency
medical transports in the fee-for-service system. (This average
includes a variety of services and additional charges for the
specific services provided by ambulance providers.) According to
the California Ambulance Association, the average cost to
provide these services is close to $600. While the rates paid to
providers is not publicly available, providers indicate that
payments from managed care plans are also significantly below
their costs. This bill would allow public entities that provide
such services to receive additional federal funding. The bill
would not increase funding to private providers.
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