BILL ANALYSIS Ó
SB 1300
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1300
(Hernandez) - As Amended June 30, 2016
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|Policy |Health |Vote:|16 - 0 |
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Urgency: Yes State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill establishes a quality assurance fee (QAF) on providers
of emergency medical transportation (EMT, or ambulance)
beginning on July 1, 2017, and uses the revenue to raise
reimbursement rates for ambulance providers. Specifically, this
bill:
1)Assesses a fee on EMT providers of 5.5% of total revenue, with
some adjustments for future years, and contains numerous
details about fee payment, recourse for nonpayment, federal
approval, administrative flexibility, and conditions required
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for implementation.
2)Allocates revenues to a newly created Medi-Cal Emergency
Medical Transport Fund and continually appropriates funding
for designated purposes.
3)Specifies revenue must be used for the following, in priority
order:
a) Up to $350,000 for Department of Health Care Services
(DHCS) staffing and administrative costs associated with
implementation (such revenue can be matched with federal
funds).
b) To pay for health care coverage in each fiscal year in
the amount of 10 percent of the projected QAF revenue for
that fiscal year.
c) To make increased payments to EMT providers.
Specifically, it requires the fee-for-service payment
schedule governing reimbursement to EMT providers be
increased by an amount calculated as specified, for both
fee-for-service and managed care.
1)Requires the department to adopt implementing regulations, and
allows non-regulatory guidance to be issued and active until
July 1, 2018.
2)Includes an urgency clause, in order to implement the QAF as
soon as federal approval is obtained.
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FISCAL EFFECT:
1)One-time costs of $1.2 million and ongoing administrative
costs of $750,000 annually (Medi-Cal Emergency Medical
Transport Fund/GF/federal) for DHCS to develop regulations,
gain federal approval, make any necessary system changes,
oversee collection of the quality assurance fee, and make
increased payments. This bill provides that $350,000 per year
must 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
GF/federal.
2)DHCS states it has been unable to independently verify data
provided by EMT providers. However, based on such data, staff
assumes costs associated with fee collection and payment as
follows:
a) Ongoing GF benefit of about $3 million per year through
reduced health care spending. This bill provides that 10%
of revenue collected (after setting aside administrative
funding) is available to the state for health care
coverage. Thus, this bill reduces the need for GF support
of the Medi-Cal program by an equal amount.
b) Additional payments of about $73 million per year for
Medi-Cal EMT services (Medi-Cal Emergency Medical Transport
Fund/ federal). 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, about $73 million per year would be
paid in increased reimbursements to providers.
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3)Unknown GF cost pressure, potentially in the millions
annually, to maintain higher ambulance transport rates if QAF
revenues are eliminated or changed. See comment 7 (a), below.
COMMENTS:
1)Purpose. According to the author, this bill increases Medi-Cal
EMT rates by levying a fee on three specific EMT 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 GF. In addition, 10% of revenue raised by the QAF would
offset GF costs for state-funded health care coverage. The
author argues inadequate Medi-Cal reimbursement for ambulance
transport is a longstanding 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
based on low Medi-Cal reimbursement levels.
2)Background. Federal law authorizes states to fund a portion of
Medicaid (Medi-Cal in California) through provider fees that
meet federal requirements. The fee revenue collected by
states is matched through federal financial participation
(FFP) and used to increase provider payments, either through
supplemental payments or through increased rates. With certain
exceptions, state QAF must be broad-based, uniform, and cannot
hold a group of providers harmless with respect to fees paid
and payments received. In California, QAF mechanisms have been
used to fund Medi-Cal managed care, skilled nursing facilities
(SNF, nursing homes), intermediate care facilities for the
developmentally disabled (ICF-DDs), and hospitals.
3)EMT Costs Versus Medi-Cal Payments. Ambulance payment rates in
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Medi-Cal are poor even compared to Medi-Cal's generally low
fee-for-service payment rates, which are generally about 50%
of Medicare levels across all types of services. A 2012 GAO
study found the median cost per ambulance transport was $429
nationally, whereas the average Medi-Cal payment is $106
before minor add-ons that slightly increase reimbursement.
4)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 some providers. It took effect for ambulance
providers in September 2013, but without retroactive
recoupment.
5)Prior Legislation.
a) AB 2577 (Cooley and Pan) of 2014 authorized governmental
entities to make intergovernmental transfers as the
non-federal share of expenditures for ground EMT services
for purposes of drawing down federal Medicaid matching
funds. AB 2577 was vetoed by the Governor, who cited
administrative capacity issues and committed to continue
work on a funding mechanism.
b) SB 1374 (Hernandez) of 2013 and AB 1257 (Gray) of 2015
increased payment rates for ground EMT services. Both were
held on the suspense files of their respective house's
Appropriations Committees.
c) AB 678 (Pan), Chapter 397, Statutes of 2011, establishes
a supplemental payment program for governmental entity
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providers of Medi-Cal EMT services, based on certified
public expenditures using state or local governmental
entities' funds as the required federal match.
6)Support and Opposition. Ambulance providers support this
bill. DHCS has expressed opposition, noting the mechanism to
increase payments is a rate increase, which puts the GF at
risk of maintaining augmented rates, notwithstanding any
subsequent changed circumstances affecting the amount of QAF
revenues DHCS may collect.
7)Staff Comments.
a) Increased Rates versus Supplemental Payments. As
noted, there are two main ways to increase reimbursement:
providing higher reimbursement rates or providing
supplemental payments without adjusting the base rate.
DHCS notes that once higher reimbursement rates are
approved by the federal government, they may prove
difficult to modify or eliminate based on changing
circumstances. For instance, if the QAF mechanism were
eliminated, or a situation emerged in which the QAF
revenue no longer covered the increased costs of the
higher rates, the GF would likely shoulder the burden of
paying for the rate increase. Supplemental payments
appear easier to modify or eliminate.
b) Administrative Costs. DHCS notes the $350,000 limit
on revenue for administrative costs may not cover the
necessary staffing, contract, and other costs the
department may incur to implement the bill. To ensure GF
neutrality, this bill should be amended to allow for
complete administrative cost recovery from the collected
revenues.
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Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081