BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1300| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 SB 1300 Page 2 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 SB 1300 Page 3 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 SB 1300 Page 4 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 SB 1300 Page 5 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. SB 1300 Page 6 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. SB 1300 Page 7 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 SB 1300 Page 8 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. SB 1300 Page 9 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 SB 1300 Page 10 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 SB 1300 Page 11 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, SB 1300 Page 12 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 **** END ****