BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       SB 1300|
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                                   THIRD READING 


          Bill No:  SB 1300
          Author:   Hernandez (D) 
          Amended:  5/31/16  
          Vote:     27 - Urgency

           SENATE HEALTH COMMITTEE:  5-0, 4/20/16
           AYES:  Hernandez, Hall, Mitchell, Monning, Pan
           NO VOTE RECORDED:  Nguyen, Nielsen, Roth, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/27/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
           
           SUBJECT:   Medi-Cal:  emergency medical transport providers:   
                     quality assurance fee


          SOURCE:    911 Ambulance Provider's Medi-Cal Alliance


          DIGEST:  This bill 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.  
          
          ANALYSIS:  

          Existing law:

           1) Establishes the Medi-Cal program, administered by the  








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             Department of Health Care Services (DHCS), which provides  
             health benefits to low-income individuals who meet specified  
             eligibility criteria. Establishes a schedule of benefits  
             under the Medi-Cal program, which includes emergency and  
             non-emergency medical transportation.

           2) 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. 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 15th 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  







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             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. 

           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 10% 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; and, 
              c)    To make increased payments to emergency medical  
                transport providers pursuant to this bill.

           1) Requires the Medi-Cal FFS and Medi-Cal managed care payment  
             schedule increase established under this bill to be funded  







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             solely the QAF, along with any interest or other investment  
             income and federal reimbursement and any other related  
             federal funds.

           2) Requires the proceeds of the QAF, the matching amount  
             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.

           3) 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.

           4) 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.

           5) 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. 

           6) 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. 

           7) Requires emergency medical transport providers to remit to  
             DHCS annual QAF amounts, as specified. Requires interest to  







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             be assessed on QAF not paid on the date due at the greater of  
             10% per annum or the rate at which 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.

           8) 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.

           9) 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.

           10)  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.

           11)  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. 

           12)  Requires DHCS to request approval from the federal Centers  
             for Medicare and Medicaid Services (CMS) for the use of fees  
             collected under this bill for the purpose of receiving  
             federal matching funds.

           13)  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  







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             federal approval. Requires, if the DHCS director, after  
             consulting with affected emergency medical transport  
             providers, determines that an alteration is needed, the  
             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.

           14)  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.

           15)  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 CMS; and,
              b)    The state receives federal approval for the increased  
                Medi-Cal FFS payment schedule increases in this bill.

           1) Ceases implementation of this bill if any of the following  
             conditions are met:

              a)    The federal CMS no longer allows the use of the QAF in  
                this bill;
              b)    The Medi-Cal FFS payment schedule increase described  
                in this bill no longer remains in effect; 
              c)    The QAF assessed and collected under this bill no  
                longer remains available for the purposes specified in  
                this bill; and, 
              d)    A final judicial determination by the California  
                Supreme Court or any California Court of Appeal that the  
                revenues collected pursuant to this article that are  
                deposited in the Fund are considered subject to be  
                proceeds of taxes within the meaning of Proposition 98.

           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 CMS, that federal  







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             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.

          Comments

           1) Author's statement.  According to the author, this bill  
             increases 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, 10% 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. 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.  
             Medi-Cal FFS emergency base ambulance rates were increased in  







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             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%). The current Medi-Cal base rate is  
             $106.38, a rate that is $11.82 lower than the rate in 1999.


          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   Yes


          According to the Senate Appropriations Committee:


            
          1)Ongoing administrative costs, likely in the hundreds of  
            thousands to low millions per year for DHCS to develop  
            regulations, gain federal approval, make any necessary system  
            changes, oversee collection of the quality assurance fee, and  
            make supplemental payments (special fund, General Fund [GF],  
            and federal funds). This bill provides that $350,000 per year  
            shall be available to DHCS for administrative costs (the state  
            would be able to draw down additional federal funding to help  
            cover the administrative costs). To the extent that actual  
            administrative costs are higher, those costs would be paid  
            from the GF and federal funds.
            
          2)Ongoing GF benefit of about $3 million per year. This bill  
            provides that 10% of revenue collected (after setting aside  
            administrative funding) shall be available to the state for  
            support of the Medi-Cal program. In doing so, this bill  
            reduces the need for GF support of the Medi-Cal program by an  
            equal amount.
          
          3)Additional payments of about $77 million per year for  
            emergency medical transportation in the Medi-Cal program  
            (special fund and federal funds). The quality assurance fee is  
            projected to generate about $30 million per year in revenues  
            (after accounting for administration and state benefits). With  
            federal matching funds, there would be about $77 million per  
            year for increased reimbursements to providers.


          SUPPORT:   (Verified5/31/16)








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          911 Ambulance Provider's Medi-Cal Alliance (source)
          American Ambulance
          American Medical Response
          California Ambulance Association
          California Fire Chiefs Association
          California Professional Firefighters
          Fire District Association of California
          Paramedics Plus
          Gold Coast Ambulance
          McCormick Ambulance Service
          Mercy Medical Transportation Inc


          OPPOSITION:   (Verified5/31/16)


          None received


          ARGUMENTS IN 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 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, the cost  to deliver  
          emergency ambulance service to all Californians, and this bill  
          addresses 17 years of a growing difference between the cost to  
          provide emergency ambulance service and Medi-Cal ambulance  
          reimbursement.

          Prepared by:Scott Bain / HEALTH / (916) 651-4111
          5/31/16 22:24:20


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