BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1374 (Hernandez) - Medi-Cal: ground ambulance rates.
Amended: April 21, 2014 Policy Vote: Health 6-0
Urgency: No Mandate: No
Hearing Date: May 19, 2014 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1372 would require the Department of Health
Care Services to establish new Medi-Cal rates for ground
ambulance services using one of two specified methodologies.
Fiscal Impact:
One-time costs of about $300,000 to develop and adopt
regulations and develop a state plan amendment by the
Department of Health Care Services (General Fund and federal
funds).
Increase Medi-Cal costs up to $200 million per year for
ground ambulance services (General Fund and federal funds).
The bill requires the Department to set new ground ambulance
rates either by paying providers based on costs or by
setting the Medi-Cal rate at an unspecified percentage of
the rate that Medicare pays in the state.
Currently, the state pays on average $150 for ambulance
transports. (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 ambulance
transportation is close to $600. If the state were to pay
based on the average cost, it would increase Medi-Cal ground
ambulance costs by about $200 million per year. (These cost
estimates assume that Medi-Cal managed care plans would
follow the fee-for-service Medi-Cal program and pay
ambulance service providers at similar rates.)
The bill would also allow the Department to pay ground
ambulance providers based on a unspecified percentage of the
rate that the federal Medicare program pays. On average,
Medicare pays $426 for ground ambulance transports. If the
SB 1374 (Hernandez)
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state were to pay 100 percent of that rate, it would
increase Medi-Cal costs by about $128 million per year.
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.)
Proposed Law: SB 1372 would require the Department of Health
Care Services to establish new fee-for-service Medi-Cal rates
for ground ambulance services using one of two specified
methodologies.
Specific provisions of the bill would:
SB 1374 (Hernandez)
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Require the Department, by July 1, 2015, to adopt
regulations establishing new rates for ground ambulance
services;
Require the Department to use either 1) a cost-based
methodology or 2) establish rates at an unspecified
percentage of the Medicare rate.
Related Legislation:
AB 2577 (Cooley and Pan) would authorize government
entities to use intergovernmental transfers to draw down
federal Medicaid funding for ground ambulance services. That
bill is pending in the Assembly Appropriations Committee.
SB 359 (Hernandez, 2011) was similar to this bill. That
bill was held on this committee's Suspense File.