BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2577 (Cooley and Pan) - Medi-Cal: ground emergency medical
transportation services: supplemental reimbursement.
Amended: June 12, 2014 Policy Vote: Health 8-0
Urgency: Yes Mandate: No
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2577 would authorize government entities to
make intergovernmental transfers of funds to the state in order
to draw down additional federal funding to offset the
unreimbursed costs of providing ground emergency medical
transportation services to Medi-Cal beneficiaries.
Fiscal Impact:
One-time costs up to $1 million to get federal approvals
and set up the program requirements by the Department of
Health Care Services (reimbursements and federal funds).
Current law requires participating government entities to
reimburse the Department for any administrative costs to
administer the program.
Ongoing costs, potentially up to $500,000 per year, to
administer the program and facilitate payments to managed
care plans (which would then be paid to government entities)
(reimbursements and federal funds).
Potential increase in federal funding to government
emergency services providers in the tens of millions per
year. Under current law, government entities can use a
similar system to receive additional federal funding based
on their actual expenditures to cover uncompensated costs
for providing emergency transportation services in
fee-for-service Medi-Cal. Under that program, annual
revenues to government entities are projected to be about
$25 million per year. This bill will allow government
entities to receive supplemental federal funding for managed
care beneficiaries. About 75% of Medi-Cal beneficiaries are
in managed care. While actual reimbursements to government
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entities will depend on the amount of intergovernmental
transfers and the maximum allowable payments for services,
total additional reimbursements under the bill could be
several times the reimbursements allowed for similar
services provided in the fee-for-service system.
Background: Under state and federal law, the Department of
Health Care Services operates the Medi-Cal program, which
provides health care coverage to pregnant women, children and
their parents with low incomes, as well as blind, disabled, and
certain other populations. Generally, the federal government
provides a 50 percent federal match for state expenditures.
Pursuant to the federal Affordable Care Act, California has
opted to expand eligibility for Medi-Cal up to 138 percent of
the federal poverty level and to include childless adults. The
Affordable Care Act provides a significantly enhanced federal
match for the Medicaid expansion. Under the law, the federal
government will pay for 100 percent of the cost of the Medicaid
expansion in 2013-14 declining to a 90 percent federal match in
the 2020 federal fiscal year and thereafter.
With the exception of certain populations (for example,
individuals eligible for limited scope Medi-Cal benefits or
individuals dually eligible for Medi-Cal and Medicare in most
counties), managed care is the primary system for providing
Medi-Cal benefits. The Department estimates that in 2014-15, 7.5
million Medi-Cal beneficiaries (73 percent of total enrollment)
will receive care through the managed care system.
The rates that the Medi-Cal program pays ambulance providers
(both private companies and public agencies) have not kept up
with increasing costs over the years. In addition, Medi-Cal
providers, including ground ambulance providers, are subject to
a 10 percent rate reduction pursuant to AB 97 (Committee on
Budget, Statutes of 2011). This rate reduction went into effect
in September 2013. However, unlike some providers, ground
ambulance providers will not be subject to retroactive cuts to
recoup the savings that the state did not achieve while AB 97
was under court injunction from 2011 to September 2013.
Under federal law, there are two methods for government entities
to receive additional federal reimbursement for Medicaid
expenditures, when the amount of non-federal funding from a
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state does not fully cover the cost of providing services.
Government can receive additional federal funding when they
demonstrate that they made "certified public expenditures" to
cover the shortfall between their actual cost to provide
services to Medicaid beneficiaries and the reimbursement rates
that they received from their state. Current state and federal
law allows government entities to use this system to receive
additional reimbursement of emergency ground ambulance
transportation provided through the Medi-Cal fee-for-service
system. Federal law does not allow certified public expenditures
to be used to receive additional federal funding for services
provided through managed care.
Federal law also allows government entities to use
"intergovernmental transfers" to draw down additional funding
for the shortfall between expenditures by government entities
and the rates paid by state Medicaid programs. Under an
intergovernmental transfer system, a government entity transfers
funding to the Department of Health Care Services. The
Department uses those funds to draw down federal matching funds
and then remits those funds to the government entity. In the
fee-for-services system, both the intergovernmental transfer
funds and the additional federal funds are remitted directly to
the government entity. In the managed care system, the funds are
paid to the managed care plan, which they makes supplemental
payments to the government entity. Federal law allows
intergovernmental transfers to supplement payments for ground
emergency medical services in the Medi-Cal managed care system.
Proposed Law: AB 2577 would authorize government entities to
make intergovernmental transfer of funds to the state in order
to draw down additional federal funding to offset the
unreimbursed costs of providing ground emergency medical
transportation services to Medi-Cal beneficiaries.
The bill would specify the process and timelines for making
intergovernmental transfers to the state and the subsequent
payments to managed care plans and government entities.
The bill contains an urgency clause.
Related Legislation: SB 1374 (Hernandez) would have required the
Department of Health Care Services to establish Medi-Cal
reimbursement rates for ground emergency medical transportation
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services using one of two specified methodologies (thereby
increasing rates). That bill was held on this Committee's
Suspense File.
Staff Comments: Currently, the state pays on average $150 for
ground emergency medical transports in the fee-for-service
system. (This average includes a variety of services and
additional charges for the specific services provided by
ambulance providers.) According to the California Ambulance
Association, the average cost to provide these services is close
to $600. While the rates paid to providers is not publicly
available, providers indicate that payments from managed care
plans are also significantly below their costs. This bill would
allow public entities that provide such services to receive
additional federal funding. The bill would not increase funding
to private providers.