BILL ANALYSIS �
AB 2577
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2577 (Cooley and Pan) - As Amended: May 1, 2014
Policy Committee: HealthVote:19-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill authorizes the Department of Health Care Services
(DHCS) and local governments to use intergovernmental transfers
(IGTs) to claim federal Medicaid funds as reimbursement for
ground emergency medical transportation services.
FISCAL EFFECT
1)Likely minor one-time administrative costs to DHCS, and
ongoing costs not likely to exceed $1 million (local
reimbursements/federal funds), to expand the existing
reimbursement program to include IGTs through managed care
contracts. Existing law stipulates DHCS administrative costs
are reimbursed by the program, and prohibits GF expenditures.
2)In addition to administrative costs noted above, timelines
required in this bill may lead to significant increased
additional administrative costs if the department, Controller,
and/or managed care plans have to develop new payment
processes. For example, DHCS pays plans on a monthly basis,
but this bill requires payments within 15 days of receipt of
federal funds.
3)Significant additional federal matching funds, potentially in
the hundreds of millions of dollars may be available if this
funding mechanism is approved, according to local government
providers of ground emergency medical transportation.
COMMENTS
1)Purpose . The author states this bill will allow qualified
ground emergency medical transportation providers to draw down
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federal matching funds to help offset the gap between the
amounts paid through Medi-Cal and the true cost of providing
those services. According to the author, new federal funding
will flow back into local government public safety and allow
the continued provision of those services at no cost to the
General Fund.
2)Background. AB 678 (Pan), Chapter 397, Statutes of 2011,
established a supplemental reimbursement program for ground
ambulance services using a funding mechanism called certified
public expenditures (CPEs). CPEs are a mechanism used by many
public entities in California, including public hospitals, to
leverage federal funding. In this program, local governmental
expenditures on emergency ground transport for Medi-Cal
patients that exceed Medi-Cal reimbursements are certified by
the local entity and verified by the state DHCS as eligible
for federal reimbursement. At the state's current approximate
50% federal matching rate, this program essentially allows
participating entities to recoup half of their costs that
exceed their Medi-Cal reimbursement. According to the
California Ambulance Association (CAA), the average cost of an
ambulance transport in California is about $600, while
Medi-Cal reimburses an average of $150. The difference, $450,
is certified as a CPE and matched with federal funds, and the
federal match is paid back to the provider. This bill expands
the existing program by providing another funding option as an
alternative to CPEs. CPEs cannot be used when beneficiaries
are enrolled in and receive their benefits through a managed
care plan, but an IGT can be used to match federal funds
instead, and the federal match is paid back as supplemental
reimbursement to providers, similar to above. The majority of
Medi-Cal enrollment is now in managed care, meaning the use of
IGTs, if federally approved, would result in a significant
fiscal benefit to local government providers.
3)Staff Comment . The author may wish to consider modifying
timelines for payment to align with existing practice for the
Controller, managed care plans, and DHCS, in order to reduce
potential unnecessary administrative costs.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081
AB 2577
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