BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1300


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          SENATE THIRD READING


          SB  
          1300 (Hernandez)


          As Amended  August 19, 2016


          2/3 vote.  Urgency


          SENATE VOTE:  36-1


           -------------------------------------------------------------------- 
          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Health          |16-0 |Wood, Maienschein,     |                     |
          |                |     |Bonilla, Burke,        |                     |
          |                |     |Campos, Chiu, Gomez,   |                     |
          |                |     |Roger Hernández,       |                     |
          |                |     |Lackey, Olsen,         |                     |
          |                |     |Patterson,             |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |Ridley-Thomas,         |                     |
          |                |     |Rodriguez, Santiago,   |                     |
          |                |     |McCarty, Waldron       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Appropriations  |19-0 |Gonzalez, Bigelow,     |                     |
          |                |     |Bloom, Bonilla, Bonta, |                     |
          |                |     |Calderon, Daly,        |                     |
          |                |     |Eggman, Gallagher,     |                     |








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          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |Eduardo Garcia,        |                     |
          |                |     |Holden, Jones,         |                     |
          |                |     |Obernolte, Quirk,      |                     |
          |                |     |Santiago, Wagner,      |                     |
          |                |     |Weber, Wood, McCarty   |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
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          SUMMARY:  Establishes the Medi-Cal Emergency Medical  
          Transportation Reimbursement Act which assesses an annual  
          quality assurance fee (QAF) on providers of emergency medical  
          transportation (EMT) in accordance with a prescribed methodology  
          beginning on July 1, 2017, and continuing each state fiscal  
          quarter.  Applies the QAF to three EMT billing codes.   
          Specifically, this bill:  


          1)Excludes from the definition of EMTs air ambulance providers,  
            or transportation provided by taxicabs, litter vans,  
            wheelchair vans, or other forms of public or private  
            conveyances, as specified.


          2)Requires each EMT provider, on or before November 15, 2016, to  
            report to the Department of Health Care Services (DHCS) data  
            on the number of actual EMTs by payor type, including, without  
            limitation, Medi-Cal fee-for-service (FFS) EMTs and Medi-Cal  
            managed care (MCMC) EMTs, and gross receipts from the  
            provision of EMTs provided each quarter from July 1, 2015, to  
            October 31, 2016, in a manner prescribed by DHCS.


          3)Requires each EMT provider, commencing with the fiscal quarter  
            beginning on January 1, 2017, and each fiscal quarter  
            thereafter, on or before the 45th day of the quarter, to  








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            report to DHCS data on the number of actual EMTs by payor  
            type, as specified, and gross receipts from the provision of  
            EMTs provided in the quarter preceding the quarter in which  
            the report is due, in an manner and format prescribed by DHCS.


          4)Authorizes DHCS to establish an Internet Web site for the  
            submission of the required reports specified in 2) and 3)  
            above.


          5)Permits DHCS to require certification by each EMT under  
            penalty of perjury of the truth of the reports required in 2)  
            and 3) above.  Authorizes DHCS, upon written notice to an EMT  
            provider, to impose a penalty of $100 per day that an EMT  
            provider fails to make a report, as specified.  Provides that  
            failure to make the report within 90 days of the date upon  
            which the report was due is considered a licensure violation,  
            as specified.


          6)Requires, on or before June 15, 2017, and each June 15  
            thereafter, the DHCS Director to calculate the annual QAF rate  
            applicable to the following state fiscal year based on the  
            most recently collected data collected from EMT providers (See  
            2) and 3) above), and publish the annual QAF rate on its  
            Internet Web site.  


          7)Prohibits the fees calculated and collected from exceeding the  
            amounts allowed under federal law, and authorizes the Director  
            of DHCS to reduce the fees as necessary to comply with the  
            amounts allowable under federal law, as specified.  Specifies  
            calculations of the QAF rate as follows: 


             a)   Calculate the QAF rate for state fiscal year (FY)  
               2017-18 by multiplying the projected total annual gross  
               receipts for all EMT providers subject to the fee by 5.1%,  








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               the resulting product to be divided by the projected total  
               annual EMTs by all EMT providers subject to the fee for the  
               state FY; and,


             b)   For state FY 2018-19 and thereafter, the QAF shall be  
               calculated by a ratio, the numerator of which shall be the  
               sum of the product of the projected aggregate fee schedule  
               amount and the effective state medical assistance  
               percentage, and the amount of DHCS staffing and  
               administrative costs, as specified, and the denominator of  
               which shall be 90% of the projected total annual EMTs by  
               all EMT providers subject to the fee for the state FY.


          8)Establishes a staggered schedule for payment of the fee  
            relative to the number of Medi-Cal FFS EMT that is rendered,  
            as specified.


          9)Requires each EMT provider subject to the fee to remit to DHCS  
            an amount equal to the annual QAF rate on specified  
            timeframes.  Authorizes DHCS to assess interest not paid on  
            the due dates 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.


          10)Authorizes DHCS, if any fee is more than 60 days overdue to  
            deduct any unpaid fee and interest owed from any Medi-Cal  
            reimbursement payments owed to the provider until the full  
            amount of the fee, interest and any penalties assessed are  
            recovered.  Requires DHCS to give the provider written  
            notification of the deduction which could be deducted over a  
            period of time taking into account the financial condition of  
            the provider.  Assesses an additional penalty if a payment is  
            not received after 60 days.










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          11)Establishes the Medi-Cal Emergency Transport Fund for  
            purposes of the QAF raised in this bill and provides funding  
            for health care coverage, in the following order of priority:


             a)   To pay for the DHCS's staffing and administrative costs  
               for implementation of this bill, not to exceed the  
               following:  i) $1,0003,000 in 2016-17; and, ii) $374,000 in  
               2017-18 and annually thereafter; 


             b)   To pay for the health care coverage in each FY in the  
               amount of 10% of the projected quality assurance fee  
               revenue for that FY, as calculated by DHCS on or before  
               June 15 preceding that FY, exclusive of any federal  
               matching funds; and,


             c)   To make increased payments to EMT providers.


          12)Increases, effective July 1, 2017, the Medi-Cal FFS payment  
            schedule governing reimbursement to EMT providers for EMTs.   
            Requires the increase to the FFS payment schedule to:  a) be  
            calculated on or before June 15, 2017, and to remain the same  
            for later fiscal years; and, b) apply only to those billing  
            codes identified in, or any equivalent, predecessor, or  
            successor billing codes as may be determined by the Director.


          13)Requires DHCS to calculate the projections based on data  
            submitted pursuant to 2) and 3) above.  Specifies the payment  
            schedule amounts.


          14)Requires the FFS and MCMC payment schedule increase to be  
            funded solely from the QAF, and federal reimbursement and any  
            other related federal funds.









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          15)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.  Includes in these  
            provisions retroactive fees and the authority for DHCS to make  
            retroactive payment of supplemental rates.  


          16)Authorizes the DHCS Director to adopt regulations as are  
            necessary to implement this bill.  Authorizes adoption of  
            regulations as emergency regulations, as specified. 


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


          18)Authorizes the DHCS Director to alter the methodology to the  
            extent necessary to meet the requirements of federal law or to  
            obtain federal approval.  Requires the DHCS Director to  
            execute a declaration if an alteration is necessary.  


          19)Authorizes the DHCS Director to add categories of exempt EMT  
            providers or apply a nonuniform fee per transport to EMT  
            providers that are subject to the fee in order to meet  
            requirements of federal law or regulations.


          20)Implements this bill only if all of the following conditions  
            are met:


             a)   The CMS does not determine that the QAF may not be used  
               for the purposes set forth in this bill;










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             b)   The state receives federal approval for the increased  
               FFS payment schedule increases; and, 


             c)   The state continues its maintenance of effort for the  
               level of state funding of EMT reimbursement for the 2017-18  
               rate year, and for every subsequent rate year, in an amount  
               no less than the amount that the state would have paid for  
               the same number of emergency medical transports under the  
               rate methodology that was in effect on July 31, 2016.


          21)Ceases implementation of this bill if one of the following  
            conditions is satisfied:


             a)   CMS no longer allows the use of the provider assessment;


             b)   The Medi-Cal FFS payment schedule increase no longer  
               remains in effect;


             c)   The QAF assessed and collected is no longer available; 


             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, or,


             e)   The state does not continue its maintenance of effort  
               for the level of state funding of EMT reimbursement for the  
               2017-18 rate year, and for every subsequent rate year, as  
               specified.  










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          22)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  
            financial participation (FFP) 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.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee: 


          1)One-time costs of $1.2 million and ongoing administrative  
            costs of $750,000 annually (Medi-Cal Emergency Medical  
            Transport Fund/General 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. 


          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  








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               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.


          1)Unknown GF cost pressure to maintain higher ambulance  
            transport rates if QAF revenues are eliminated or changed.  


          COMMENTS:  According to the author, this bill increases Medi-Cal  
          EMT rates by levying a QAF on three 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 go to the  
          state GF.  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 system.  


          This bill assesses a QAF on revenue EMT providers receive from  
          three EMT reimbursement codes (A0429 Basic Life Support  
          Emergency, A0427 Advanced Life Support (ALS1) Emergency, and  
          A0433 ALS 2).  A QAF rate of 5.1% is assessed for 2017-18  
          against the gross revenue of all EMT providers from the three  
          reimbursement codes.  After 2017-18, estimates of the QAF rate  
          provided by the 911 Ambulance Provider's Medi-Cal Alliance, the  
          sponsor of this bill, are as follows:  for 2018-19 the QAF would  
          be at 5.7%; for 2019-20 it would be 5.8%; and for 2020-21 and  
          beyond, the rate would be at 5.9%.  The increase in the QAF rate  
          is needed to account for the reduction in the federal match  
          (known as the Federal Medical Assistance Percentages or FMAP)  
          for certain populations including adults who became eligible for  
          Medi-Cal under the optional expansion enacted under the federal  
          Affordable Care Act.









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          Analysis Prepared by:                                             
                          Rosielyn Pulmano / HEALTH / (916) 319-2097  FN:  
          0004567