BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 2577
AUTHOR: Cooley and Pan
AMENDED: June 12, 2014
HEARING DATE: June 18, 2014
CONSULTANT: Bain
SUBJECT : Medi-Cal: ground emergency medical transportation
services: supplemental reimbursement.
SUMMARY : Permits governmental entities to elect to make
intergovernmental transfers (IGTs) as the non-federal share of
Medi-Cal expenditures for ground emergency medical
transportation services, as long as the IGTs are in conformity
with federal law. Contains an urgency clause that will make this
bill effective upon enactment.
Existing law:
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 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.
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 federal financial participation
(FFP);
b. Provide evidence supporting the certification
Continued---
AB 2577 | Page 2
as specified by Department of Healthcare Services
(DHCS), and submit data as specified by DHCS to
determine the appropriate amounts to claim as
expenditures qualifying for FFP; and,
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).
3.Requires the supplemental reimbursement paid 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 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; and,
c. Requires the supplemental Medi-Cal
reimbursement provided by this bill to be distributed
exclusively to public ground emergency medical
transportation services providers on a per-transport
basis or other federally permissible basis.
4.Requires DHCS to obtain approval from CMS for the CPE payment
methodology to be utilized, and prohibits DHCS from making any
payment prior to obtaining that approval.
5.Requires the non-federal share of the supplemental
reimbursement submitted to CMS for purposes of claiming FFP to
be paid only with funds from the governmental entities that
are certified to the state.
6.Requires DHCS to promptly seek any necessary federal approvals
for the implementation of the CPEs. Permits DHCS to limit the
program to those costs that are allowable expenditures under
federal Medicaid law. Prohibits the CPE-related provisions
from being implemented if federal approval is not obtained.
Requires DHCS to submit claims for FFP for CPEs that are
allowable expenditures under federal law.
AB 2577 | Page
3
This bill:
1.Permits governmental entities to elect to include, in
collaboration with DHCS, and as the non-federal share of
expenditures for ground emergency medical transportation
services, voluntary IGTs, as long as the IGTs are in
conformity with federal law. Requires, if a governmental
entity elects to include IGTs as the non-federal share of
expenditures, the IGT funds to be submitted no later than
November 1st of each year.
2.Requires DHCS, if the state receives IGT funds, to certify the
IGT funds as the non-federal share of expenditures within 60
days of receiving the IGT funds. Requires DHCS to submit to
the Controller claims for payment within 10 days of receiving
the FFP.
3.Requires DHCS to distribute supplemental reimbursement for
eligible ground emergency medical transportation providers for
services provided to Medi-Cal managed care beneficiaries to
managed care plans within 30 days of receiving the FFP.
4.Requires each Medi-Cal managed care plan, within 30 days of
receiving funds, distribute 100 percent of the funds received
to the eligible ground emergency medical transportation
providers.
5.Defines "eligible providers" as ground emergency medical
transportation providers that provide services in Medi-Cal
fee-for-service or Medi-Cal managed care, for purposes of CPEs
and IGTs.
6.Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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
AB 2577 | Page 4
are reimbursed by the program, and prohibits General Fund
expenditures.
2.In addition to administrative costs noted above, timelines
required in this bill may lead to increased additional
administrative workload costs if DHCS, the State Controller,
and/or managed care plans have to develop new payment
processes.
3.Significant additional federal matching funds, likely in the
tens or hundreds of millions of dollars may be available if
this funding mechanism is approved, according to local
government providers of ground emergency medical
transportation.
PRIOR VOTES :
Assembly Health: 19- 0
Assembly Appropriations:16- 0
Assembly Floor: 77- 0
COMMENTS :
1.Author's statement. According to the author, much of
California's population receives emergency ambulance services
from local government entities. Many of these local government
entities receive reimbursement for their services through
Medi-Cal. Unfortunately, the reimbursements Medi-Cal provides
often fall short of meeting the actual cost of providing such
services. Across the state, the average Medi-Cal reimbursement
for emergency ambulance transport is approximately $120. The
actual cost to provide these services can range from $498 to
$1,200. The non-reimbursed costs are absorbed into an agency's
general fund and paid for by taxpayers.
2.Federal Medicaid regulations and CPEs and IGTs as the
non-federal share. Federal Medicaid regulations permit both
state and local governments to participate in the financing of
the non-federal portion of medical assistance expenditures.
CPEs are one of several mechanisms that a state may employ to
obtain FFP and to make supplemental payments to Medi-Cal
providers without cost to the General Fund (GF). Under AB 678
(Pan), Chapter 397, Statutes of 2011, state and local entities
have the option to claim FFP for the difference between the
Medi-Cal reimbursement rate and the actual cost of providing
the service. 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
AB 2577 | Page
5
CPEs. Medicaid law allows states to finance the non-federal
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. The Governor's 2014-15 budget assumes annual
supplemental reimbursements of approximately $300 million as a
result of AB 678.
Another source of funds for the state share is IGTs, which is
the source of funds authorized under this bill. IGTs are
transfers of public funds between governmental entities, such
as from a county to the State. One source of the funding used
for the transfer is local tax dollars. This bill would also
allow local governmental entities the option of using IGTs as
the state share to draw down FFP in Medi-Cal. Both CPEs and
IGTs allow the state to reduce its GF spending, and allow
local governments to receive additional Medicaid funds using
their own funds to draw down federal funds.
3.Governmental Accounting Office (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. The GAO found
ambulance providers without shared costs had higher costs per
transport, but 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 lower population density, lower productivity
(measured as number of transports furnished per staffed hour),
and a greater percentage of revenues from local tax support.
4.Related legislation. SB 1374 (Hernandez) would have required
DHCS, by July 1, 2015, to adopt regulations establishing the
Medi-Cal reimbursement rate for ground ambulance services
using one of two specified methodologies. SB 1374 was held on
the Senate Appropriations suspense file.
AB 2577 | Page 6
5.Prior legislation. AB 97 (Committee on Budget), Chapter 3,
Statutes of 2011, the health budget trailer bill, among other
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. The 2014-2015 Governor's budget proposes to
exempt certain classes of providers and services from the
retroactive recoupments, including medical transportation, but
these providers are subject to the rate reduction.
SB 359 (Hernandez) of 2011, would have required DHCS, by July
1, 2012, to adopt regulations establishing the Medi-Cal
reimbursement rate for ground ambulance services using one of
two specified methodologies. SB 359 was held on the Senate
Appropriations Committee suspense file.
AB 2173 (Beall) Chapter 547, Statutes of 2010, established a
$4 penalty on every vehicle code violation. The resulting
revenue is 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 non-emergency
Basic Life Support (BLS) and Advanced Life Support (ALS)
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 BLS and ALS services when a patient
reasonably believes that without immediate medical attention,
AB 2577 | Page
7
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 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
FFP 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 ALS services, as defined. AB 511 was 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.
6.Support. This bill is jointly sponsored by the California
Fire Chiefs Association, the California Professional
Firefighters, and the California Metropolitan Fire Chiefs. The
sponsors state that, as Medi-Cal beneficiaries move from
fee-for-service to Medi-Cal managed care plans, much of the
anticipated additional reimbursement from the recently enacted
CPE program will disappear as CPEs cannot be used for
obtaining the supplemental reimbursement for the Medi-Cal
managed care population. The sponsors argue that this bill
would allow those entities that provide ground emergency
medical transportation to Medi-Cal beneficiaries to capture
additional reimbursements for Medi-Cal managed care
beneficiaries through the use of an IGT. This will allow
public agency providers to seek partial reimbursement for
AB 2577 | Page 8
their share of unreimbursed Medi-Cal ground transportation
expenses via funding provided by the federal government as
existing Medi-Cal rates do not cover the operating cost of a
typical ambulance transport.
7.Concerns. The California Ambulance Association (CAA) writes
expressing concerns with this bill. CAA states it supports the
intent to increase Medi-Cal funding for ambulance transports,
but this bill addresses ambulance service funding deficiencies
for only 25 percent of the Medi-Cal ambulance transports
conducted in California. CAA states private ambulance
companies, which provide 75 percent of all transports in this
state, are specifically excluded from participating in this
program due to federal rules governing CPE programs. CAA
states Medi-Cal reimburses ambulance transports at less than
one-quarter of what it costs to provide the service, and the
rate of reimbursement has not been increased since 1999.
Unlike other health care providers, ambulance providers cannot
adjust their patient load to make up for Medi-Cal losses,
which are just as high for a private ambulance company as for
a public provider. CAA concludes that while, this bill makes a
step toward ensuring the stability of critical ambulance
service in California, it leaves the vast majority of Medi-Cal
ambulance transports dramatically underfunded.
SUPPORT AND OPPOSITION :
Support: California Fire Chiefs Association (co-sponsor)
California Professional Firefighters (co-sponsor)
League of California Cities (co-sponsor)
Association of California Healthcare Districts
Burbank Fire Department
California Metropolitan Fire Chiefs
California Special Districts Association
California State Firefighters' Association
City of Dinuba Fire Department
Consumnes Community Services District Fire Department
Culver City
Gilroy Fire Department
Hayward Fire Department
Mill Valley Fire Department
Ontario Fire Department
Orange City Fire Department
Rialto Fire Department
Sacramento Metropolitan Fire District
Oppose: None received
AB 2577 | Page
9
-- END --