BILL ANALYSIS �
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 359
S
AUTHOR: Hernandez
B
AMENDED: As Introduced
HEARING DATE: April 13, 2011
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CONSULTANT:
5
Bain
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SUBJECT
Medi-Cal: ground ambulance rates
SUMMARY
This bill would require the Department of Health Care
Services (DHCS), by July 1, 2012, to adopt regulations
establishing the Medi-Cal reimbursement rate for ground
ambulance services using one of two specified
methodologies.
CHANGES TO EXISTING LAW
Existing law:
Establishes the Medi-Cal program, administered by 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.
Establishes a schedule of benefits under the Medi-Cal
program, which includes emergency and nonemergency medical
transportation.
Establishes, through regulation, maximum Medi-Cal
reimbursement rates for medical transportation services,
and prohibits bills from exceeding charges made to the
Continued---
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general public.
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,
subject to federal approval, federal financial
participation (FFP), and the reduction meeting federal
Medicaid requirements. 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 to not 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:
Requires DHCS, by July 1, 2012, to adopt regulations
establishing the Medi-Cal reimbursement rate for ground
ambulance services, based upon existing statutes,
regulations, and case law.
Requires DHCS, in adopting the regulations, to use one of
the following methodologies:
� Establish payment rates through regulation based on the
methodology required by the courts, including doing all
of the following:
o Develop a rate study or establish a
cost-based evidentiary base that results in
proposed rates.
o Present the proposed rates at a public
hearing.
o Combine public input and the evidentiary
base for a final adopted regulation.
� Establish payment rates for ground ambulance services at
120 percent of the current Medicare Ambulance Fee
Schedule and designates the ambulance cost study
conducted by the federal Government Accountability Office
(GAO-07-383) as the evidentiary base.
Makes various legislative findings regarding state and
federal requirements for Medi-Cal ground ambulance rates,
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including the requirements of the Medicaid State Plan and
the state's lack of compliance; appellate court cases on
Medi-Cal provider rates; ground ambulance rates for
prisoners and worker's compensation, which are being
reimbursed at rates up to 120 percent of the Medicare
Ambulance Fee Schedule; and Medi-Cal payment rates, which
cover one-quarter of the cost of service.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
According to the author, California's ambulance services
are in crisis, and there are many reasons for this. The
author states the ever increasing costs for providing
crucial emergency response and ambulance transport cannot
be satisfied by increasingly inadequate Medi-Cal
reimbursement rates. The author states that, while the
costs to provide essential ambulance services have
significantly increased during the past decade, including
escalating wages and benefits, increasing insurance fees,
newly mandated equipment, including vehicles and supplies,
Medi-Cal reimbursement has not kept pace with these
increased costs and has in fact declined. The author cites
a Government Accountability Office (GAO) analysis of
ambulance costs that found the average cost of providing
ambulance service on a per transport basis was $592, as
compared to the current Medi-Cal base reimbursement rate of
$117.02. With Medi-Cal beneficiaries comprising
approximately 21 percent of all patient transports, the
author states the current Medi-Cal rate inequity
jeopardizes all Californians' access to private ambulance
services as an essential component of emergency medical
care.
Ambulance providers in California
According to estimates by the California Ambulance
Association (CAA, the sponsor of this measure), there are
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
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California population is transported in an ambulance
annually, and Medi-Cal fee-for-service 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 through Medi-Cal managed
care in 2009, at a cost of $26 million.
Medi-Cal rates for ambulance services
According to the Medi-Cal policy manual, Medi-Cal covers
ambulance and other medical transportation only when
ordinary public or private conveyance is medically
contra-indicated and transportation is required to obtain
needed medical care. To receive reimbursement, a recipient
must be eligible for Medi-Cal on the date of service.
Ambulance providers are instructed to use the ambulance
service Basic Life Support (BLS) base rate when billing for
responses to an emergency "911" call. In addition to the
base rate, Medi-Cal provides additional funding for
mileage, night calls, extra attendants, waiting times,
certain supplies and services, and a separate reimbursement
rate for non-emergency transportation for a single patient.
According to DHCS, the Medi-Cal base rate for BLS ambulance
services for daytime calls was $71.59 in 1997, $105.82 in
1998, and $118.20 in 1999. Non-emergency transportation
for one patient was $61.71 in 1997, $95.95 in 1998, and
$107.16 in 1999. Mileage was $3.18 per mile in 1997, and
was increased to the $3.55 in 1999. In 2008, AB X3 5
(Committee on Budget) Chapter 3, Statutes of 2008 reduced
specified Medi-Cal provider rates (including ground
ambulance rates) by 10 percent effective July 1, 2008.
Later in 2008, AB 1183 (Committee on Budget), Chapter 758,
Statutes of 2008 repealed the 10 percent rate reduction,
and instead reduced Medi-Cal rates by 1 percent, effective
March 1, 2009.
The one percent reduction will end May 31, 2011 pursuant to
the recently enacted health budget trailer bill of 2011, AB
97 (Committee on Budget), Chapter 3, Statutes of 2011.
Instead of a one percent reduction, effective June 1, 2011,
specified Medi-Cal provider rates will be reduced by 10
percent for dates of services on and after June 1, 2011,
subject to federal approval, FFP, and the reduction meeting
federal Medicaid requirements. If the director of DHCS
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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 to not implement the particular
payment reduction and to adjust the payment as necessary to
comply with federal Medicaid requirements. If the 10
percent Medi-Cal rate reduction in AB 97 takes effect for
ground ambulance rates, rates will be 10 percent lower than
Medi-Cal rates in 1999.
Federal law and Medicaid state plan requirements
Federal law allows a state to qualify for federal Medicaid
matching funds only if it designs its program within
specific federal requirements. These include eligibility
for specific population groups, coverage for certain
medical services and medical providers, and adherence to
specific rules relating to payment methodologies, payment
amounts, and cost-sharing for Medicaid beneficiaries. To
qualify for federal Medicaid matching funds, a state must
obtain approval of its Medicaid State Plan (State Plan)
from the federal Department of Health and Human Services,
Centers for Medicare and Medicaid Services (CMS). The
State Plan is the contract between the federal government
and the state, which spells out the terms and conditions
under which the state will receive federal Medicaid
matching funds. Each change in eligibility for
beneficiaries, change in coverage of services or change in
methodology of reimbursement in a state's Medicaid program
requires a State Plan Amendment (known as a SPA) that must
be approved by CMS.
CMS reviews SPA reimbursement methodologies for services
provided under the State Plan for consistency with Section
1902(a)(30)(A) of the Social Security Act (Act) and other
applicable federal statutes and regulations. Section
1902(a)(30)(A) of the Act requires that states "assure that
payments are consistent with efficiency, economy and
quality of care and are sufficient to enlist enough
providers so that care and services are available under the
plan at least to the extent that such care and services are
available to the general population in the geographic
area."
California's State Plan contains the methodology to be
utilized by DHCS in establishing payment rates, as follows:
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� The development of an evidentiary base or rate study
resulting in the determination of a proposed rate.
� To the extent required by state or federal law or
regulations, the presentation of the proposed rate at a
public hearing to gather public input to the rate
determination process.
� The determination of a payment rate based on an
evidentiary base, including pertinent input from the
public.
� The establishment of the payment rate through the state's
adoption of regulations specifying the rate in the
California Code of Regulations.
To change reimbursement methods and standards used to pay
Medicaid providers, a state must submit a SPA for CMS to
review and approve. Prior to the effective date of the
SPA, the state must a public notice of any change in the
methods and standards for setting the State Plan payment
rates for services. The notification is intended to inform
providers and other affected parties of changes to Medicaid
payment rates. In general, CMS reviews state payment
methodologies and supporting documentation to ensure that
the State Plan methodology can be audited and is
comprehensively described, and that payment rates are
economic, efficient and sufficient to attract willing and
qualified providers.
Existing California regulation requires DHCS to administer
the Medi-Cal program in accordance with the State Plan,
applicable state law (as specified in the Welfare and
Institutions Code) and Medi-Cal regulations.
The state budget, through health budget trailer bills in
2008 and 2010, enacted Medi-Cal rate reductions for various
providers. Implementation of many of these Medi-Cal
provider reductions has been blocked by court action
(although DHCS indicates the Medi-Cal medical
transportation provider reductions took effect).
In litigation over reductions in Medi-Cal rates, the
federal Ninth Circuit Court of Appeals stated, in upholding
a preliminary injunction, that in order for the state to
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comply with Section 1902(a)(30)(A)'s "requirement that
payments for services must be consistent with efficiency,
economy, and quality of care, and sufficient to ensure
access," it must: (1) "rely on responsible cost studies,
its own or others', that provide reliable data as a basis
for its rate setting," and (2) study the impact of the
contemplated rate change(s) on the statutory factors prior
to setting rates, or in a manner that allows those studies
to have a meaningful impact on rates before they are
finalized.
In January 2011, the United States Supreme Court agreed to
hear a consolidated case, which includes three cases from
California, regarding whether the Supremacy Clause of the
Constitution confers a private right of action on providers
and beneficiaries to challenge Medicaid reimbursement rates
for compliance with Section 1902(a)(30)(A) of the Act's
requirements that payments be consistent with efficiency,
economy and quality of care. The case is not anticipated
to be argued before the Supreme Court until October 2011.
GAO report on ambulance rates
A 2007 GAO report on ambulance rates entitled "Costs and
Expected Medicare Margins Vary Greatly" found 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 typically had fewer transports per year, 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.
Medi-Cal ambulance rates compared to other payors
At the request of CAA, Hobbs, Ong & Associates, Inc.
published an "Industry Performance Survey" in September
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2006 based on a survey of private for-profit ambulance
providers. The chart below shows the findings average
revenue per transport by payor source and what percentage
of transports were paid by each payor:
Annual California Ambulance Services - By Source of Payment
---------------------------------------------------------
|Payment |Percentage| Average | Revenue |
|Source | of | Revenue per | Distribution by |
| |Transports| Transport by | Payor |
| | | Payor | |
|---------+----------+---------------+--------------------|
|Medicare | 34.9% | $521 | 34.9% |
|---------+----------+---------------+--------------------|
|Medi-Cal | 21% | $255 | 10.7% |
|---------+----------+---------------+--------------------|
|Facility | 8.2% | $723 | 8.9% |
|---------+----------+---------------+--------------------|
|Private | 17.9% | $201 | 6.3% |
|pay | | | |
|---------+----------+---------------+--------------------|
|Health | 17.7% | $1,100 | 38.7% |
|plan | | | |
|---------+----------+---------------+--------------------|
|Other | 0.3% | $342 |.02% |
---------------------------------------------------------
Existing regulations which establish a maximum fee for
ambulance services through the worker's compensation fee
schedule set a maximum rate at an amount not to exceed 120
percent of the Medicare Fee Schedule for ambulance
services. In addition, the California Department of
Corrections and Rehabilitation (CDCR) is prohibited under
existing law from reimbursing contract ambulance service
providers at rates above 120 of the amount payable under
the Medicare Fee Schedule, except for contracts entered
into through the CDCR's designated health care network
provider. This maximum rate can be adjusted in regulation.
Ambulance providers that do not contract with CDCR are
required to be reimbursed at the Medicare Fee Schedule
rate.
Related bills
The health budget trailer bill, AB 97 (Committee on
Budget), Chapter 3, Statutes of 2011, among other
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provisions, reduces Medi-Cal payments to providers by 10
percent, including medical transportation rates, for dates
of service on and after June 1, 2011, subject to federal
approval, FFP, and the reduction meeting federal Medicaid
requirements.
AB 678 (Pan) would establish a supplemental payment program
for governmental entity providers of Medi-Cal emergency
medical transportation services, based on certified public
expenditures using state or local governmental entities'
funds as the required federal match. AB 678 passed out of
the Assembly Health Committee on April 3, 2011.
Prior legislation
AB 2173 (Beall), Chapter 547, Statutes of 2010, established
a $4 penalty on every vehicle code violation. The
resulting revenue would be matched by federal funds and
used to make supplemental payments for emergency air
medical transportation services in the Medi-Cal Program.
AB 1932 (Hernandez) of 2010, in its final form, would have
authorized DHCS to utilize certain service levels for
purposes of determining billing codes for emergency and
nonemergency basic life and advanced life support
transportation and specialty care transportation. If DHCS
used the service levels to determine billing codes, AB 1932
would have required DHCS to adopt the definitions and
Healthcare Common Procedure Coding System codes for those
service levels that have been established by CMS, and to
determine the above described billing codes in a
revenue-neutral manner. AB 1932 was held on the Senate
Appropriations suspense file.
AB 1174 (Hernandez) of 2009 would have required Medi-Cal to
cover emergency basic life support and advanced life
support services when a patient reasonably believes that
without immediate medical attention, a serious health
condition, as specified, could reasonably result. In
addition, AB 1174 would have increased and established in
statute maximum Medi-Cal reimbursement rates for ambulance
transportation services, and would have required the rates
be adjusted to reflect changes in the California Consumer
Price Index. AB 2257 (Hernandez) of 2008 was similar to AB
1147, except that AB 2257 also would have also increased
Medi-Cal rates for air ambulance providers. AB 1174 and AB
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2257 were both held on the Assembly Appropriations suspense
file.
AB 511 (De La Torre) of 2010 would have imposed, as a
condition of participation in the Medi-Cal Program, a
quality assurance fee (QAF) on certain ambulance
transportation services providers, to be administered by
DHCS. The proceeds from the QAF would be required to be
deposited into the Medi-Cal Ambulance Transportation
Services Providers Fund (Fund). Moneys in the Fund would
be available only to enhance federal financial
participation for ambulance transportation services under
the Medi-Cal Program, or to provide additional
reimbursement to, and to support quality improvement
efforts of, ambulance transportation services providers,
including increased reimbursement for and improvement of
the quality of the provision of advanced life support
services, as defined. Held on the Senate Appropriations
suspense file; subsequently referred to Senate Health and
Senate Revenue and Taxation Committees. At the request of
the author, the bill was not heard in a policy committee
again.
AB 1153 (Beall) of 2009 would have levied an additional
penalty of $3 upon every fine, penalty, or forfeiture
imposed and collected by the courts for all offenses
involving a vehicle violation, except certain parking
offenses, in each county. The resulting revenue would be
transferred to the state and continuously appropriated to
DHCS solely for the purposes of augmenting Medi-Cal
reimbursement paid to emergency air medical transportation
services providers. DHCS would be required to use the
moneys in the Emergency Air Medical Transportation Act Fund
and federal matching funds to increase the Medi-Cal
reimbursement or supplemental payments for emergency air
medical transportation services in an amount not to exceed
normal and customary charges charged by the emergency air
ambulance transportation services provider. AB 1153 was
held on the Senate Appropriations suspense file.
Arguments in support
CAA writes in support of this bill as a measure intended to
increase the inadequate Medi-Cal reimbursement rate for
ambulance providers in California. CAA states that
ambulance providers are an essential part of California's
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health care safety-net, and are unique in two ways when
compared to other Medi-Cal providers. First, ambulance
providers are required to respond, treat and transport all
emergency patients without exception and without regard to
a patient's ability to pay. Second, in most cases,
ambulance providers are required to respond within a
mandated time period with fully equipped and appropriately
staffed ambulances. CAA states that while costs to provide
essential ambulance services have significantly increased
during the past decade, Medi-Cal's reimbursement for these
services has not kept pace with these increased costs and
is far below the average cost of providing ambulance
service on a per transport basis.
COMMENTS
1.Should Medi-Cal rates for ground ambulance services be
changed?
This bill addresses an important issue in that provider
payment rates in Medi-Cal are a key factor in
beneficiaries' ability to access program services and the
ability of providers to continue to provide services. In
addition, Medi-Cal ambulance providers, as part of the
911 emergency response system, are unable to "opt out" of
providing services to Medi-Cal beneficiaries. Medi-Cal
reimbursement rates for ambulances, as well as for many
other provider types, are significantly less than
Medicare rates, and rates are scheduled to be further
reduced 10 percent beginning June 1, 2011 as part of this
year's health budget trailer bill.
This bill requires DHCS to adopt regulations by July 1,
2011 establishing the Medi-Cal reimbursement rate for
ground ambulance services based on existing law,
regulations and case law using one of two specified
methodologies: The first methodology mirrors language in
the existing State Plan by requiring a rate study or by
establishing a cost-based evidentiary base that results
in proposed rates. The requirement for relying on cost
studies as a basis for setting rates is also cited by the
federal Ninth Circuit Court of Appeals in Medi-Cal rate
litigation. In effect, this option would place in state
law this appellate court and State Plan requirement for
Medi-Cal ground ambulance rates, and would likely result
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in DHCS increasing ground ambulance Medi-Cal rates.
The second option is the establishment of payment rates at
120 percent of the current Medicare Ambulance Fee
Schedule, designating the GAO study as the evidentiary
cost base. The effect of this provision, if elected by
DHCS, would be a Medi-Cal rate increase. However, given
the state's current fiscal constraints, should DHCS be
required to change Medi-Cal ambulance service rates?
POSITIONS
Support: California Ambulance Association (sponsor)
California Fire Chiefs Association
Emergency Medical Services Administrators'
Association of California
Fire Districts Association of California
Hall Ambulance Service Incorporated
Sierra Ambulance Service, Inc.
Oppose: None on file.
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