BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 359 (Hernandez)
Hearing Date: 5/2/2011 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 7-0
_________________________________________________________________
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BILL SUMMARY: SB 359 would require the Department of Health Care
Services, by July 1, 2012, to adopt regulations establishing the
Medi-Cal reimbursement rate for ground ambulance services using
one of two specified rate methodologies.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Increased Medi-Cal $165,000 - $225,000 annually
General/*
payments to ambulance commencing July 1, 2012 Federal
providers
DHCS Regulations $150 - $300$0 $0
General/*
Federal
*Costs shared 50 percent General Fund, 50 percent federal funds
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
This bill would require the Department of Health Care Services
(DHCS), no later than July 1, 2012, to adopt regulations
establishing the Medi-Cal reimbursement rate for ground
ambulance services. This bill would require DHCS to establish
the rate using either of the following methodologies:
1) Through regulation based on the methodology required by
the courts, which includes developing a rate study or
establishing a cost-based evidentiary base, presenting the
proposed rates at a public hearing, and combining public
input and the evidentiary base for a final adopted
regulation.
2) At 120 percent of the current Medicare Ambulance Fee
Schedule and designate the ambulance cost study conducted
by the Federal Government Accountability Office
(GAO-07-383) as the evidentiary base. The study found that
the per transport cost for ambulance providers without
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shared costs averaged $415, but varied from $99 to $1,218
per transport, a variation of more than $1,100. With a 18
percent weighted inflation adjustment used by Medicare, the
actual costs would be $592 today.
This bill would also make various findings and declarations that
would state that: 1) DHCS is not currently in compliance with
state regulations governing the development of Medi-Cal payment
rates for ground ambulance services, 2) current law requires
ground ambulance services provided to state prison inmates and
state workers compensation program to be reimbursed at the
maximum rate of 120 percent of the Medicare Ambulance Fee
Schedule, and, 3) independent government cost studies indicate
that current Medi-Cal payment rates cover just one quarter of
the average cost of ground ambulance service.
DHCS would need at least one staff member for 18 months to 2
years to promulgate regulations at a cost of approximately
$100,000 - $150,000 annually. Since this bill would require the
regulations to be completed within 6 months of enactment, the
costs would be about $150,000 - $300,000 in FY 2011-2012. Costs
would be shared 50 percent General Fund and 50 percent federal
funds.
Medi-Cal base rates, established in 1999 in Section 51527 of
Title 22 of the California Code of Regulations, for emergency
basic life support services is $118.20 and for non-emergency
services is $107.16. Additionally, ambulances may claim $3.55
per mile of transport one-way as well as various other specified
rate augmentations.
2010 Medi-Cal vs. Medicare Rates
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|Description |2010 Medi-Cal |2010 Medicare |
| |Rate |Rate |
|-------------------------------+----------------+-----------------|
|Ground Mileage, per mile |$3.55 |$6.74 |
|-------------------------------+----------------+-----------------|
|Advanced Life Support, |$107.16 |$297.26 |
|Non-Emergency | | |
|-------------------------------+----------------+-----------------|
|Basic Life Support, |$107.16 |$247.72 |
|Non-Emergency | | |
SB 359 (Hernandez)
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|-------------------------------+----------------+-----------------|
|Advanced Life |$118.20 |$470.67 |
|Support-Emergency | | |
|-------------------------------+----------------+-----------------|
|Basic Life Support-Emergency |$118.20 |$396.35 |
|-------------------------------+----------------+-----------------|
|Advanced Life Support, Level 2 |$118.20 |$681.23 |
|-------------------------------+----------------+-----------------|
|Specialty Care Transport |$118.20 |$806.57 |
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In AB 97 (Committee on Budget), Chapter 3, Statutes of 2011,
ground ambulance rates, along with those of several other
categories of providers, are reduced by 10 percent commencing
June 1, 2011, subject to federal approval. If the federal
government approves the rate reductions, the base ground
ambulance service rates for emergency and non-emergency services
would be $106.38 and $96.44, respectively.
The cost differential between the actual cost of service
($592.00) and average Medi-Cal reimbursement ($118.20) per
transport is $473.80 or $485.62 with the 10 percent reduction.
The cost differential between 120 percent of Medicare Basic Life
Support-Emergency ($475.62) and average Medi-Cal reimbursement
($118.20) per transport is $357.42 or $369.24 with the 10
percent reduction.
In 2009, there were about 292,000 transports of Medi-Cal
fee-for-service patients at a cost of approximately $44 million.
The California Ambulance Association, the sponsor of this bill,
estimates that there were an additional 171,000 ambulance
transports reimbursed through Medi-Cal managed care plans in
2009 at a cost of about $26 million.
Potential costs of this bill are estimated as follows: assume 1)
436,000 transports annually, 2) 100 percent of them Basic Life
Support-Emergency (transports would, in reality, include all 6
types of services listed above and their accompanying rates),
and 3) use Medi-Cal base rates without mileage and additional
augmentations provided for in regulation. Using these
assumptions, if DHCS were to adopt the first payment method in
this bill, there would be approximately $219 million in
additional costs annually ongoing, or $225 million with the 10
percent reduction. If DHCS were to adopt the second payment
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method in this bill, there would be approximately $165 million
in additional costs annually ongoing, or $171 million with the
10 percent reduction. These costs would be paid at California's
normal federal medical assistance percentage of 50 percent
federal funds and 50 percent General Funds. These numbers are
illustrative estimates and actual costs would vary based on
aggregate Medi-Cal reimbursement and actual Medicare
reimbursement for each of the different service areas.
If DHCS were to adopt new ground ambulance rates, the department
would need to submit a state plan amendment to the Centers for
Medicare and Medicaid Services (CMS) for approval of the
methodology. CMS would evaluate the methodology to ensure that
it would provide rates that would be efficient, economic, and
sufficient to attract enough willing and qualified providers so
that services are available to beneficiaries throughout the
state.
In recent litigation over reductions in Medi-Cal rates, the
federal Ninth Circuit Court of Appeals found that in order for
the state to comply with federal law's "requirement that
payments for services must be consistent with efficiency,
economy, and quality of care, and sufficient to ensure access,"
California must: (1) "rely on responsible cost studies, its own
or others,' that provide reliable data as a basis for rate
setting, and (2) study the impact of the potential rate changes
in a manner that would 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
California cases regarding whether providers and beneficiaries
have standing to challenge Medicaid reimbursement rates. The
case is not anticipated to be heard before October 2011.