BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 678|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 678
Author: Pan (D), et al.
Amended: 8/15/11 in Senate
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 8-0, 6/22/11
AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee,
De Le�n, DeSaulnier, Wolk
NO VOTE RECORDED: Rubio
SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/25/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
ASSEMBLY FLOOR : 76-1, 6/2/11 - See last page for vote
SUBJECT : Medi-Cal: supplemental provider reimbursement
SOURCE : California Professional Firefighters
DIGEST : This bill allows ground emergency medical
transportation service providers owned by public entities
(public ground emergency medical transportation providers)
to receive supplemental Medi-Cal reimbursement, in addition
to the rate of payment that these providers would otherwise
receive for Medi-Cal ground emergency medical
transportation services, up to actual costs. The
nonfederal share of the supplemental reimbursement would be
paid with funds from specified governmental entities
through certified public expenditures.
CONTINUED
AB 678
Page
2
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 children, their
parents or caretaker relatives, pregnant women, elderly,
blind or disabled persons, and refugees who meet
specified eligibility criteria.
2. Establishes a schedule of benefits under the Medi-Cal
program, which includes emergency and nonemergency
medical transportation.
3. Establishes, through regulation, maximum Medi-Cal
reimbursement rates for medical transportation services,
and prohibits providers from billing Medi-Cal at rates
that exceed charges made to the general public.
4. Reduces specified Medi-Cal provider rates (including for
ground ambulance services), effective June 1, 2011, by
10 percent for dates of services on and after June 1,
2011, provided the reduction meets federal Medicaid
requirements, receives federal approval, and allows the
state to receive federal financial participation (FFP).
If the director of DHCS determines that the payments do
not comply with federal Medicaid requirements or that
FFP is not available with respect to any payment that is
reduced, the director retains the discretion not to
implement the particular payment reduction and to adjust
the payment as necessary to comply with federal Medicaid
requirements. This rate reduction replaces an existing
one percent Medi-Cal provider reduction currently in
effect.
This bill:
1. Allows ground emergency medical transportation services
providers owned by public entities (the state, a city, a
county, a city and county, a fire protection district, a
special district, a health care district or a federally
recognized Indian Tribe) that are enrolled in the
CONTINUED
AB 678
Page
3
Medi-Cal program and that provide emergency medical
transportation services to Medi-Cal beneficiaries
continuously through the state fiscal year, to receive
supplemental Medi-Cal reimbursement, in addition to the
rate of payment that the provider would otherwise
receive for Medi-Cal ground emergency medical
transportation services.
2. Makes participation in the program by a public ground
emergency medical transportation services provider
voluntary.
3. Requires, if an applicable governmental entity elects to
seek supplemental reimbursement on behalf of a public
ground emergency medical transportation service
provider, the governmental entity to do all of the
following:
A. Certify, in conformity with the federal regulatory
requirements, that the claimed expenditures for the
ground emergency medical transportation services
(known as certified public expenditures or CPEs) are
eligible for FFP.
B. Provide evidence supporting the certification as
specified by DHCS, and submit data as specified by
DHCS to determine the appropriate amounts to claim as
expenditures qualifying for FFP.
C. Keep, maintain, and have readily retrievable, any
records specified by DHCS to fully disclose
reimbursement amounts to which the public emergency
medical transportation provider is entitled, and any
other records required by the federal Centers for
Medicare and Medicaid Services (CMS).
4. Requires the supplemental reimbursement paid under this
bill to be calculated and paid as follows:
A. Requires the supplemental reimbursement to be
equal to the amount of FFP received as a result of
the CPE claim.
B. Prohibits the CPE amount, when combined with the
CONTINUED
AB 678
Page
4
amount received from all other sources of
reimbursement from the Medi-Cal program, from
exceeding 100 percent of actual costs, as determined
pursuant to the Medi-Cal State Plan, for ground
emergency medical transportation services.
C. Requires the supplemental Medi-Cal reimbursement
provided by this bill to be distributed exclusively
to public ground emergency medical transportation
service providers on a per-transport basis or other
federally permissible basis.
5. Requires DHCS to obtain approval from the federal CMS
for the payment methodology to be utilized, and
prohibits DHCS from making any payment prior to
obtaining that approval.
6. States legislative intent in enacting this bill to
provide the supplemental reimbursement described in this
bill without any expenditure from the General Fund (GF).
7. Requires a public ground transportation ambulance
provider, as a condition of receiving supplemental
reimbursement under this bill, to enter into, and
maintain, an agreement with DHCS for the purposes of
implementing this bill and reimbursing DHCS for the
costs of administering this bill.
8. Requires the nonfederal share of the supplemental
reimbursement submitted to the CMS for purposes of
claiming FFP to be paid only with funds from the
governmental entities that are certified to the state.
9. Requires DHCS to promptly seek any necessary federal
approvals for the implementation of this bill.
10.Permits DHCS to limit the program to those costs that
are allowable expenditures under federal Medicaid law.
11.Prohibits this bill from being implemented if federal
approval is not obtained.
12.Requires DHCS to submit claims for FFP for the
CONTINUED
AB 678
Page
5
expenditures under this bill that are allowable
expenditures under federal law.
13.Requires DHCS, on an annual basis, to submit any
necessary materials to the federal government to provide
assurances that claims for FFP will include only those
expenditures that are allowable under federal law.
14.Requires the director of DHCS, if either a final
judicial determination is made by any court of appellate
jurisdiction, or a final determination is made by the
administrator of the federal CMS, that the supplemental
reimbursement provided in this bill must be made to
providers not described in this bill, to execute a
declaration stating that the determination has been
made; on that date this bill becomes inoperative.
15.Requires the declaration to be provided to specified
entities, including legislative fiscal and policy
committees.
16.Permits DHCS to implement and administer the provisions
of this bill by means of provider bulletins, or similar
instructions, without taking regulatory action.
Background
Ambulance providers in California . According to estimates
by the California Ambulance Association (CAA), there are
approximately 715 ambulance providers in California, of
which 77 percent are fire departments. However, of the
licensed ambulances, 74 percent are private. Approximately
8.3 percent of the California population is transported in
an ambulance annually, and the Medi-Cal fee-for-service
program reimbursed slightly over 292,000 transports in
2009, at a cost of nearly $44 million. CAA estimates there
were an additional 171,000 ambulance transports reimbursed
by Medi-Cal managed care plans in 2009, at a cost of $26
million.
Federal Medicaid regulations and public funds as the
non-federal share . Federal Medicaid regulations establish
requirements on the public funds that can be used as the
state share to draw down FFP in Medicaid. CPEs are one of
CONTINUED
AB 678
Page
6
several mechanisms that a state may employ to obtain FFP
and to make supplemental payments to Medi-Cal providers
without cost to the GF. Under a CPE arrangement,
government providers certify their Medicaid expenditures to
the state, and the state then obtains federal reimbursement
on the basis of these CPEs. Medicaid law allows states to
finance the nonfederal share of payments with CPEs as long
as the funds are derived from state or local tax revenue
and are certified by units of local or state government as
eligible for federal reimbursement. States are responsible
for ensuring that expenditures are eligible for federal
reimbursement by reviewing standard cost reports filed
annually by each government provider. The reimbursement
rate cannot exceed the equivalent Medicare rate.
Under this bill, state and local entities will have the
option to claim FFP for the difference between the
reimbursement rate under the Medi-Cal Program and the
actual cost of providing the service. The program in this
bill is modeled after AB 915 (Frommer), Chapter 747,
Statutes of 2002, which authorizes local public agencies
and public health facilities to use local funds to obtain
FFP for supplemental Medi-Cal reimbursements for hospital
outpatient services. AB 959 (Frommer), Chapter 162,
Statutes of 2006, expands this to facilities (state
hospitals, veterans' homes, and clinics) and to clinics
owned or operated by the state, cities, counties, and
University of California (UC) and health care districts.
In 2005, the State of California sought a five-year federal
waiver as a Medicaid demonstration project under the
authority of Section 1115(a) of the Social Security Act.
In fee-for-service Medi-Cal, the nonfederal share of
Medi-Cal funds for county and UC hospitals (known as
Designated Public Hospitals or DPHs) was shifted from the
state GF to CPEs. This allowed the state to reduce its GF
spending, and allowed DPH hospitals to receive cost-based
reimbursement using their own funds to draw down the
required federal matching funds. This financing mechanism
was continued in the 2010 successor demonstration waiver.
Governmental Accounting Office (GAO) report on ambulance
rates . A 2007 GAO report on ambulance rates entitled
"Costs and Expected Medicare Margins Vary Greatly" found
CONTINUED
AB 678
Page
7
that the costs of ground ambulance transports were highly
variable across ambulance providers without shared costs,
reflecting differences in provider characteristics (an
example of an ambulance provider with shared costs would be
an ambulance in a fire department, where the cost of the
ambulance is part of the overall cost of the fire
department). Costs per transport for ambulance providers
without shared costs averaged $415, but varied from $99 to
$1,218 per transport-a range of more than $1,100. The GAO
found ambulance providers without shared costs had higher
costs per transport, fewer transports per year typically, a
greater percentage of transports in which more than a basic
medical intervention occurred, more transports in rural
counties with lowest population density, lower productivity
(measured as number of transports furnished per staffed
hour), and a greater percentage of revenues from local tax
support.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Supplemental Medi-Cal potentially in the tens of
millions of Federal
payments to providers dollars annually upon
federal approval
DHCS administration $150 $300
$300 Local/*
of the program
Federal
*50 percent local funds, 50 percent federal funds
SUPPORT : (Verified 8/25/11)
California Professional Firefighters (source)
California Fire Chiefs Association
Cities of Palo Alto, Sacramento, South Lake Tahoe, and
CONTINUED
AB 678
Page
8
Visalia
Cosumnes Fire Department
Fire Districts Association of California
League of California Cities
North Tahoe Fire Protection District
OPPOSITION : (Verified 8/25/11)
California Ambulance Association
ARGUMENTS IN SUPPORT : The California Professional
Firefighters (CPF), sponsor of this bill, report that
ambulance transports have increased 13 percent from 1997 to
2006, and ambulance transports of Medi-Cal beneficiaries
have increased 19 percent from 2006 to 2009. CPF also
points out that Medicare rates were reduced 10 percent in
2010, representing a reduction of $35 million statewide and
straining fire department budgets even more. According to
CPF, current Medi-Cal rates do not cover the operating cost
of a typical ambulance transport. These unreimbursed costs
are subsequently absorbed into a fire department's general
fund and paid for by the taxpayers. In support of this
bill, CPF points out that DHCS has identified an existing
federal program that provides a 50 percent match on
unreimbursed expenses. According to the sponsor, the
sooner this voluntary program is up and running, the sooner
local fire departments can access much needed fiscal
relief.
ARGUMENTS IN OPPOSITION : The California Ambulance
Association (CAA) writes that it is opposed to this bill
unless it is amended to include private sector ambulance
providers and to achieve a statewide solution to
underfunded Medi-Cal rates. CAA states this bill uses the
federal funds generated from CPEs to fund public providers,
even though both the public and private sector ambulance
providers in California suffer from the same inadequate
Medi-Cal reimbursement rates. CAA states that, because
federal regulations allow a statewide solution, this bill
should be amended to assure the entire statewide emergency
medical transportation services system receives a
desperately needed increase in Medi-Cal ambulance funding,
and that this bill as drafted will preclude some
communities from benefiting from the receipt of federal
CONTINUED
AB 678
Page
9
funds.
ASSEMBLY FLOOR : 76-1, 6/2/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Harkey
NO VOTE RECORDED: Butler, Gorell, Hall
CTW:kc 8/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED