BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 1300 --------------------------------------------------------------- |AUTHOR: |Hernandez | |---------------+-----------------------------------------------| |VERSION: |April 5, 2016 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |April 20, 2016 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Scott Bain | |---------------+-----------------------------------------------| | | | --------------------------------------------------------------- SUBJECT : Medi-Cal: emergency medical transport providers: quality assurance fee SUMMARY : Imposes a quality assurance fee on each transport provided by an emergency medical transport provider in accordance with a prescribed methodology. Requires the resulting revenue to be placed in a continuously appropriated fund to be used to provide additional Medi-Cal reimbursement to emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. Would take effect immediately as an urgency bill. Existing law: 1)Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), which provides health benefits to low-income individuals who meet specified eligibility criteria. 2)Establishes a schedule of benefits under the Medi-Cal program, which includes emergency and non-emergency medical transportation. Establishes, through regulation, maximum Medi-Cal reimbursement rates for medical transportation services, and prohibits the amount billed from exceeding charges made to the general public. 3)Reduces specified Medi-Cal provider rates (including ground ambulance services), effective June 1, 2011, by 10% for dates of services on and after June 1, 2011, subject to federal approval, federal financial participation (FFP), and the reduction meeting federal Medicaid requirements. If the director of DHCS determines that the payments do not comply SB 1300 (Hernandez) Page 2 of ? with federal Medicaid requirements or that FFP is not available with respect to any payment that is reduced, the director retains the discretion to not implement the particular payment reduction and to adjust the payment as necessary to comply with federal Medicaid requirements. The 10% reduction took effect for ambulance providers for dates of service on or after September 5, 2013 but was not applied retroactively back to June 2011. This bill: 1)Imposes, commencing with the state fiscal quarter beginning on July 1, 2017, and continuing each fiscal quarter thereafter, a quality assurance fee (QAF) for each emergency medical transport provided by each emergency medical transport provider. 2)Defines an "emergency medical transport" as the act of transporting an individual from any point of origin to the nearest medical facility capable of meeting the emergency medical needs of the patient by an ambulance licensed, operated, and equipped in accordance with applicable state or local statutes, ordinances, or regulations that are billed with one of three billing codes: A0429 Basic Life Support Emergency, A0427 Advanced Life Support Emergency, and A0433 Advanced Life Support 2. 3)Requires the DHCS director, on or before June 15, 2017, and each June 15 thereafter, to calculate the annual QAF rate applicable to the following state fiscal year based on the most recently collected data collected from emergency medical transport providers. Requires DHCS to publish the annual QAF rate on its Internet Web site. 4)Establishes, for the 2017-18 fiscal year and the 2019-19 fiscal year and thereafter, different methods for calculating the annual QAF rate. Prohibits the fees calculated and collected from exceeding the amounts allowable under federal law. 5)Requires, effective July 1, 2017, the Medi-Cal fee-for-service (FFS) payment schedule governing reimbursement to emergency medical transport providers for emergency medical transports to be increased pursuant to a methodology established by this bill, using revenue from the QAF. SB 1300 (Hernandez) Page 3 of ? 6)Requires each Medi-Cal managed care health plan to provide payment to emergency medical transport providers under this bill that is equal to the amount of payment the provider would have received under FFS Medi-Cal, by referencing existing federal law and regulation. 7)Requires the DHCS director to deposit the QAF in the Medi-Cal Emergency Medical Transport Fund (Fund) created by this bill. Continuously appropriates the moneys in the Fund, and any federal matching funds to DHCS. 8)Requires moneys in the Fund, including any interest and dividends earned on money in the fund, to be available exclusively to enhance federal financial participation for ambulance services under the Medi-Cal program and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, as well as to pay for the state's administrative costs and to provide funding for health care coverage for Californians, in the following order of priority: a) To pay for DHCS staffing and administrative costs directly attributable to implementing this bill, capped at $350,000 for each fiscal year, exclusive of any federal matching funds; b) To pay for the health care coverage in each fiscal year in the amount of 5% of the projected QAF revenue for that fiscal year, as calculated by the DHCS on or before June 15 preceding that fiscal year, exclusive of any federal matching funds; c) To make increased payments to emergency medical transport providers pursuant to this bill; and, d) To provide additional support for health care coverage of Californians. 9)Requires the Medi-Cal FFS payment schedule increase established under this bill to be funded solely from the following: a) The QAF, along with any interest or other investment income; and, b) Federal reimbursement and any other related federal funds. 10) Requires the proceeds of the QAF, the matching amount SB 1300 (Hernandez) Page 4 of ? provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for emergency medical transports provided by emergency transport providers and not to supplant this funding. 11) Requires the DHCS director to adjust the annual QAF fee rate so that the available fee amount for the state fiscal year will approximately equal the aggregate Medi-Cal fee schedule amount for the state fiscal year if, during a state fiscal year, the actual or projected available QAF amount exceeds or is less than the actual or projected aggregate fee schedule amount by more than 1%. Requires the available fee amount for a state fiscal year to be considered to equal the aggregate fee schedule amount for the state fiscal year if the difference between the available fee amount for the state fiscal year and the aggregate fee schedule amount for the state fiscal year constitutes less than 1% of the aggregate fee schedule amount for the state fiscal year. 12) Requires each emergency medical transport provider to report to DHCS data on the number of actual emergency medical transports by payor type, and gross receipts from the provision of emergency medical transports in a manner and format prescribed by DHCS. 13) Permits DHCS to establish an Internet Web site for the submission of reports required by this bill. 14) Permits DHCS to require a certification by each emergency medical transport under penalty of perjury of the truth of the required reports. Permits DHCS to impose a penalty of $100 per day against an emergency medical transport provider for every day that an emergency medical transport provider fails to make a required report within five days of the date upon which the report was due. 15) Requires the DHCS director, on or before June 15, 2017, and each June 15 thereafter, to publish the annual QAF rate on its Internet Web site. 16) Requires emergency medical transport providers to remit to DHCS annual QAF amounts, as specified. 17) Requires interest to be assessed on QAF not paid on the date due at the greater of 10% per annum or the rate at which SB 1300 (Hernandez) Page 5 of ? DHCS assesses interest on Medi-Cal program overpayments to hospitals that are not repaid when due. Requires interest to begin to accrue the day after the date the payment was due, and to be deposited in the Medi-Cal Emergency Medical Transport Fund established by this bill. 18) Permits DHCS to deduct unpaid QAF amounts and interest owed from Medi-Cal reimbursements payments owed to a provider until the full amount of the fee and interest is owed in the event that any fee payment is more than 60 days overdue. Requires any deduction to be made only after DHCS gives the provider written notification, and requires any deduction to be deducted over a period of time that takes into account the financial condition of the provider. 19) Requires DHCS to accept an emergency medical transport provider's payment even if the payment is submitted in a rate year subsequent to the rate year in which the fee was assessed. 20) Establishes provisions for delayed payment of the QAF if there is a delay in the implementation of this bill for any reason, including a delay in any required approval of the QAF and the reimbursement methodology. These include retroactive fees and the authority for DHCS to make retroactive payment of supplemental rates. 21) Permits DHCS to adopt regulations (including one-time emergency regulations) as are necessary to implement this bill, and permits the use of provider bulletin, or other similar instructions, without taking regulatory action, provided that no such bulletin or other similar instructions remains in effect after June 30, 2018. 22) Requires DHCS to request approval from the federal Centers for Medicare and Medicaid Services for the use of fees collected under this bill for the purpose of receiving federal matching funds. 23) Permits the DHCS director to alter the methodology specified in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires, if the DHCS director, after consulting with affected emergency medical transport providers, determines that an alteration is needed, the SB 1300 (Hernandez) Page 6 of ? director to execute a declaration stating that this determination has been made, and to provide a copy to the fiscal and appropriate policy committees of the Legislature. 24) Permits the DHCS director to add categories of exempt emergency medical transport providers or apply a non-uniform fee per transport to emergency medical transport providers that are subject to the fee in order to meet requirements of federal law or regulations. Permits the DHCS director to exempt categories of emergency medical transport providers from the fee if necessary to obtain federal approval. 25) Implements this bill only if, and as long as, both of the following conditions are met: a) The state receives federal approval of the QAF from the federal Centers for Medicare and Medicaid Services (CMS); and, b) The state receives federal approval for the increased Medi-Cal FFS payment schedule increases in this bill. 1) Continues to implement this bill if all of the following conditions are met: a) The federal CMS continues to allow the use of the QAF in this bill; b) The Medi-Cal FFS payment schedule increase described in this bill remains in effect; and, c) The QAF assessed and collected under this bill remains available for the purposes specified in this bill. 1)Makes this bill inoperative in the event of a final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the administrator of the federal Centers for Medicare and Medicaid Services, that federal financial participation is not available with respect to any payment made under the methodology implemented under this bill because the methodology is invalid, unlawful, or contrary to any provision of federal law or regulations or of state law. 2)Takes effect immediately as an urgency bill. FISCAL SB 1300 (Hernandez) Page 7 of ? EFFECT : This bill has not been analyzed by a fiscal committee. COMMENTS : 1)Author's statement. According to the author, this bill would increase Medi-Cal emergency medical transportation rates by levying a QAF on three emergency medical transportation reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state General Fund. In addition, 5% of revenue raised by the QAF would go to the state General Fund. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot "opt out" or otherwise limit their participation in the Medi-Cal program the way other non-emergency health care providers can to obtain a more favorable payor mix. While the costs to provide essential ambulance services has significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would increase Medi-Cal emergency medical transportation rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs. 2)Medi-Cal rates for ambulance services. Medi-Cal covers emergency medical transportation when necessary to obtain Medi-Cal covered benefits when a beneficiary's medical or physical condition is acute and severe, necessitating immediate diagnosis and treatment so as to prevent death or disability. When billing Medi-Cal for a "911 call," ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services. SB 1300 (Hernandez) Page 8 of ? Medi-Cal FFS emergency base ambulance rates were increased in 1997 and 1998 and were last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%) pursuant to AB 97 (Committee on Budget, Chapter 3, Statutes of 2011). The ambulance rate reduction was not imposed retroactively but did apply prospectively, beginning on September 5, 2013. The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999. 3)Provider fees. Federal Medicaid law authorizes states to levy fees on health care providers if the fees meet federal requirements. Provider taxes must be broad-based and uniformly imposed (unless waived), and not violate a "hold harmless" prohibition that offsets the tax. Federal regulations allow 19 different classes of health care services on which a provider tax may be imposed, one of which is "emergency ambulance services." Nearly all states (including California) fund a portion of their share of Medicaid program costs through a fee on health care providers. Under these funding methods, states collect funds (through fees, taxes, or other means) from providers, which are then matched with federal Medicaid funds to provide increased Medicaid (Medi-Cal in California) reimbursement to health care providers. California currently has Medicaid provider fees on managed care plans, hospitals, skilled nursing facilities and intermediate care facilities for the developmentally disabled. 4)Calculation of QAF amount owed and Medi-Cal rate increase amounts. This bill levies a per emergency medical transport QAF. This bill establishes how the QAF will be collected in the initial year (2017-18) and then on an on-going basis (2019-19 and thereafter) and how the resulting revenue will be used to fund state administrative costs, 5% for the GF and rate increases for three reimbursement codes for emergency medical transportation providers . For 2017-18, this bill would asses a QAF at a rate of 5.5% against the gross revenue of all emergency medical transport providers from three reimbursement codes. From this amount, the state cost of administering the bill ($350,000) and the 5% that goes to the GF would be subtracted. The remaining amount would then be matched by federal Medicaid funds to determine the total funds available for the rate increase. This amount SB 1300 (Hernandez) Page 9 of ? would then be divided by the number of emergency medical transports to determine the per transport increase for the three reimbursement codes, and this amount would be added to the existing 2015-16 base rates. The dollar amount of the increase would be the same for each of the three codes, and the increased rate would be fixed for the duration of the bill to address DHCS' concern that rates could increase at a rate higher than revenue from the QAF, which would result in either a rate reduction or GF cost to maintain the increased rate. For the 2017-18 fiscal year and thereafter, the QAF amount owed would be calculated differently than the initial 2016-17 fiscal year. The state would determine the total funds amount needed to fund the increased rate for the three billing codes and multiply that by the state share of Medi-Cal costs (referred to as the State Medicaid Assistance Percentage or SMAP). The cost of the state administration ($350,000) would be added to this amount. The resulting amount would be divided by 95% (to account for the 5% that would go to the GF), and then divided by the total transports for the three billing codes to establish the per transport fee. 5)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 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. 6)Related legislation. AB 1257 (Gray) would have required 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, SB 1300 (Hernandez) Page 10 of ? and would designate the ambulance cost study conducted by the federal GAO as the evidentiary base. AB 1257 was held on the Assembly Appropriations Committee suspense file. 7)Prior legislation. a) SB 1374 (Hernandez of 2013) 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. b) AB 2577 (Cooley and Pan) would have authorized governmental entities to make intergovernmental transfers as the non-federal share of expenditures for ground emergency medical transportation services for purposes of drawing down federal Medicaid matching funds. AB 2577 was vetoed by the Governor. c) SB 359 (Hernandez of 2011), was similar to SB 1374 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 gutted and amended and used for another purpose. d) AB 678 (Pan, Chapter 397, Statutes of 2011) established 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. e) 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. f) 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 SB 1300 (Hernandez) Page 11 of ? 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. g) 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 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 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. h) 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 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 advanced life support services, as defined. 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. i) AB 1153 (Beall of 2009) would have levied an additional penalty of $3 upon every fine, penalty, or forfeiture imposed and collected by the courts for all offenses SB 1300 (Hernandez) Page 12 of ? involving a vehicle violation, except certain parking offenses, in each county. The resulting revenue would be transferred to the state and continuously appropriated to DHCS solely for the purposes of augmenting Medi-Cal reimbursement paid to emergency air medical transportation services providers. DHCS would be required to use the moneys in the Emergency Air Medical Transportation Act Fund and federal matching funds to increase the Medi-Cal reimbursement or supplemental payments for emergency air medical transportation services in an amount not to exceed normal and customary charges charged by the emergency air ambulance transportation services provider. AB 1153 was held on the Senate Appropriations suspense file. 1)Support. This bill is sponsored by the 911 Provider's Medi-Cal Alliance (911 Alliance), which writes that in 2015, the leadership of six of California's largest private ambulance companies (American Ambulance, American Medical Response, Care Ambulance, Hall Ambulance, Paramedics Plus and Rural Metro Ambulance) came together to discuss Medi-Cal reimbursement rates for emergency ambulance transports and formed the 911 Ambulance Provider's Medi-Cal Alliance with a mission to work together to help resolve the ongoing issue of low Medi-Cal reimbursement rates. The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for emergency transports since 1999, and in those 17 years since the last increase, they have twice seen their Medi-Cal rates decreased. In those 17 years, employee wages continue to grow, fuel prices have skyrocketed, healthcare costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill would address 17 years of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing emergency medical transportation. 2)Author's amendments. The author intends to amend this bill to: (a) clarify that the QAF revenue would fund the Medi-Cal managed care rate increase paid to ambulance providers as the bill currently on refers to the QAF funding the FFS increase; (b) to eliminate duplicate language regarding the Fund; (c) to reword for clarity the "poison pill" language that halts the QAF from operating if CMS approval is withdrawn or if the SB 1300 (Hernandez) Page 13 of ? Medi-Cal rate increase no longer applies; (d) to clarify that the state cost for administering the provisions of this bill and the 5% of fee revenue that goes to the GF is taken into account in determining the QAF rate; (e) to clarify that "transport" means "emergency medical transport" and to correct a cross reference; and (f) to make a correction of the dates at the end of the second-to-last sentence in Section 14129.4(a) (from 2016-17 to 2017-18). SUPPORT AND OPPOSITION : Support: 911 Ambulance Provider's Medi-Cal Alliance (sponsor) American Medical Response Oppose: None received -- END --