BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                        VETO


          Bill No:  SB 1300
          Author:   Hernandez (D)
          Amended:  8/19/16  
          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

           SENATE FLOOR:  36-1, 6/1/16
           AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,  
            Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,  
            Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,  
            Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,  
            Morrell, Nielsen, Pan, Pavley, Stone, Vidak, Wieckowski, Wolk
           NOES: Nguyen
           NO VOTE RECORDED: Moorlach, Roth, Runner

           SENATE FLOOR:  37-1, 8/25/16
           AYES:  Allen, Anderson, Bates, Beall, Berryhill, Block,  
            Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,  
            Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,  
            Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,  
            Morrell, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski,  
            Wolk
           NOES:  Nguyen
           NO VOTE RECORDED:  Moorlach

           ASSEMBLY FLOOR:  76-1, 8/23/16 - See last page for vote

           SUBJECT:   Medi-Cal:  emergency medical transport providers:   
                     quality assurance fee








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          SOURCE:    911 Ambulance Providers 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  
             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  








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             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) 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. 


           3) 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. Permits the director of DHCS to reduce the increased  
             fee-for-service (FFS) payment schedule if the director makes  
             a determination that the fees collected exceeds the amounts  
             allowable under federal law, only to the extent necessary to  
             reduce the fees to comply with the amount allowable under  
             federal law.


           4) Requires, effective July 1, 2017, the Medi-Cal 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. Requires the increase to the FFS  
             payment schedule under this bill to be calculated on or  
             before June 15, 2017, and to remain the same for later fiscal  
             years. Requires the increase to the FFS payment schedule  
             under this bill to apply only to those billing codes  
             identified in, or any equivalent, predecessor, or successor  
             billing codes as may be determined by the director under this  
             bill.


           5) 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  








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             would have received under FFS Medi-Cal, by referencing  
             existing federal law and regulation.


           6) 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.


           7) 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  
                $1 million for 2016-17 and $374,00 for the 2017-18 and  
                each fiscal year thereafter, 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  
             solely the QAF, along with any interest or other investment  








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             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. 










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


           7) 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. 


           8) 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.


           9) 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 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.


           10)  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.









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           11)  Implements this bill, and continues implementation of this  
             bill, only if certain conditions are met, including federal  
             approval and the state maintaining its existing level of  
             state funding for emergency medical transports in an amount  
             not 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.


           12)  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 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  








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             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  
             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 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/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.








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          2)DHCS states it has been unable to independently verify data  
            provided by emergency medical transportation (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.


          3)Unknown GF cost pressure, potentially in the millions  
            annually, to maintain higher ambulance transport rates if QAF  
            revenues are eliminated or changed.




          SUPPORT:   (Verified8/22/16)


          911 Ambulance Provider's Medi-Cal Alliance (source) 
          American Ambulance
          American Medical Response
          California Ambulance Association
          California Fire Chiefs Association
          California Professional Firefighters
          Emergency Medical Services Administrators Association of  








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          California
          Fire Districts Association of California
          Fresno County Board of Supervisors
          Paramedics Plus
          Gold Coast Ambulance
          McCormick Ambulance Service
          Mercy Medical Transportation Inc.
          Napa County Board of Supervisors


          OPPOSITION:   (Verified8/22/16)


          Department of Finance
          Department of Health Care Services


          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.


          ARGUMENTS IN OPPOSITION:     DHCS writes in opposition that  
          using QAF revenue to increase the Medi-Cal fee schedule for  
          ambulance services, rather than having QAF revenue fund  
          supplemental payments places the General Fund at greater risk of  
          having to maintain the augmented rates if there are any changed  
          circumstance affecting the amount of QAF DHCS can collect. In  
          addition, DHCS states that using projected amounts in  








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          calculating the QAF may pose a challenge to obtaining federal  
          approval because it would make the calculation of the fee  
          uncertain, and DHCS is concerned that General Fund may be  
          required if QAF revenue falls short, Medi-Cal ambulance  
          utilization increases, or federal law requires a reduction in  
          QAF fees.


          GOVERNOR'S VETO MESSAGE:


               I am returning Senate Bill 1300 without my signature.


               This bill creates a new ambulance quality assurance fee to  
               be collected by the Department of Health Care Services.  
               This fee would be used to claim additional federal funding  
               necessary to increase Medi-Cal reimbursements for ambulance  
               services.


               I support establishing a quality assurance fee to bring in  
               additional federal funding to support emergency  
               transportation services. However, the structure of the rate  
               increase in this bill is unlike any other fee structure  
               supported by health care related quality assurance fees. I  
               am concerned this structure puts the state general fund at  
               risk for paying the increased rate if the revenue falls  
               short or if the fee is reduced or removed in the future.


               I urge the Legislature and ambulance providers to work with  
               the Departments of Health Care Services and Finance to  
               restructure this fee in a way that protects the general  
               fund and allows for an increase in reimbursement for  
               emergency transportation services.




           ASSEMBLY FLOOR:  76-1, 8/23/16
           AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  








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            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Grove, Hadley, Roger Hernández,  
            Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,  
            Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty,  
            Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,  
            Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,  
            Santiago, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
           NOES:  Harper
           NO VOTE RECORDED:  Chang, Gray, Steinorth



          Prepared by:  Scott Bain / HEALTH / (916) 651-4111
          10/24/16 11:39:11


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