Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. services, including medical transportation services. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides, except as specified, that certain optional Medi-Cal benefits, including, among others, certain adult dental services and optometric and optician services, are excluded from coverage under the Medi-Cal program. Existing law, beginning May 1, 2014, or the effective date of any necessary federal financial participation approvals, whichever is later, provides that only specified adult dental services are a covered Medi-Cal benefit for persons who are 21 years of age or older, as specified. Existing law and regulations prescribe various requirements governing payment policies and reimbursement rates for these services.

This bill would make technical, nonsubstantive changes to this provision. require the State Department of Health Care Services to establish payment rates for ground ambulance services based on changes in the Consumer Price Index-Urban and the Geographic Practice Cost Index, and would require the department to designate a specified ambulance cost study conducted by the federal Government Accountability Office as the evidentiary base.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions. Existing law provides, except as specified, that certain optional Medi-Cal benefits, including, among others, certain adult dental services and optometric and optician services, are excluded from coverage under the Medi-Cal program. Existing law, beginning May 1, 2014, or the effective date of any necessary federal financial participation approvals, whichever is later, provides that only specified adult dental services are a covered Medi-Cal benefit for persons who are 21 years of age or older, as specified.

This bill would make technical, nonsubstantive changes to this provision.

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1257

Author:(Gray) – As Amended Ver:March 26, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the Department of Health Care Services (DHCS) to establish payment rates for ground ambulance services using specified indices and evidence. Specifically, this bill:

1. Requires DHCS to establish payment rates for ground ambulance services based on changes in both the Consumer Price Index for All Urban Consumers (CPI-U) and the California weighted average Geographic Practice Cost Index (GPCI).

2. Requires DHCS to use the 2007 ambulance cost study conducted by the federal Government Accountability Office (GAO) as the evidentiary basis for the payment rates.

FISCAL EFFECT:

1. Estimated annual increased costs of $215 million (GF/federal), assuming $415 per transport is used as the 2007 "evidentiary base" for establishing an ambulance rate, and adjusting for the GPCI, as well as CPI-U growth since 2007.

2. Annual cost increases in the range of $5-10 million per year (GF/federal), depending on changes in the CPI-U.

3. Because there are nine different GPCIs that apply to different areas of the state, DHCS may incur unknown administrative and information technology systems costs to pay differential rates in different locations.

4. With the adjustments required in this bill, ambulance rates would increase by $367, from $150 on average (before accounting for 10% payment reductions) to $517 in 2016, a 245% increase.

COMMENTS:

1. Purpose. This bill is intended to increase Medi-Cal ambulance rates to better reflect the cost of doing business, given ambulance providers have a legal mandate to respond to all calls. This bill is supported by ambulance providers and first responders.

2. Costs Versus Medi-Cal Payments. The average $150 Medi-Cal payment rate per transport, even excluding the 10% payment reduction discussed below, is 32% of the median 2012 Medicare payment of $464. Accounting for the 10% cuts puts payments at about 29% of Medicare rates. This compares poorly even with Medi-Cal's low FFS payment rates, which average $51% of Medicare levels across all services. A 2012 GAO study found the median cost per transport was $429 nationally.

3. Recent Payment Reduction. Pursuant to AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, Medi-Cal provider rates were reduced by 10% for dates of services on and after June 1, 2011, subject to federal approval, and federal financial participation. This rate reduction was blocked by court action for many providers, but it took effect for ambulance providers in September 2013. DHCS has announced ambulance providers would not be subject to a retroactive recoupment of their rates.

4. Payment Adjustments. This bill requires DHCS to establish payment rates for ground ambulance services based on changes in the CPI-U and the California weighted average GPCI, designating a federal GAO report as the evidentiary basis. The referenced 2007 GAO report on ambulance rates, entitled “Costs and Expected Medicare Margins Vary Greatly,” cites costs per transport for ambulance providers averaged $415, but varied from $99 to $1,218 per transport. The CPI-U is a measure that examines the changes in the price of a basket of goods and services purchased by urban consumers, and has averaged about 2% over the last decade. The GPCI is an adjustment Medicare uses to adjust payments based on local cost of doing business. There are nine values specific to different areas of California based on differences in costs, which provide for an average 13% increase to base Medicare rates.

5. Prior Legislation.
   
   

1. SB 1374 (Ed Hernandez) of 2014 would have required the 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 Committee Suspense File.
   
   

2. SB 359 (Ed Hernandez) of 2011 was similar to this bill in that it 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 designated one of the two methodologies as 120% of the Medicare ambulance fee schedule. SB 359 was held on the Senate Appropriations Committee Suspense File and was later amended for another purpose.
   
   

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 28, 2015

ASSEMBLY COMMITTEE ON HEALTH

Rob Bonta, Chair

ABPCA Bill Id:AB 1257

Author:(Gray) – As Amended Ver:March 26, 2015

SUBJECT: Medi-Cal: ground ambulance rates.

SUMMARY: Requires the Department of Health Care Services (DHCS) to establish payment rates for ground ambulance services using specified indices and evidence. Specifically, this bill:

1. Requires DHCS to establish payment rates for ground ambulance services based on changes in both the Consumer Price Index for All Urban Consumers (CPI-U) and the California weighted average Geographic Practice Cost Index (GPCI).
   
   

2. Requires DHCS to use the 2007 ambulance cost study conducted by the federal Government Accountability Office (GAO) as the evidentiary basis for the payment rates.
   
   

EXISTING LAW:

1. Establishes the Medi-Cal program to provide comprehensive health benefits to low-income individuals who meet specified eligibility criteria.
   
   

2. Establishes a schedule of benefits to be covered by the Medi-Cal program, including emergency and non-emergency transportation services.
   
   

3. Establishes, through regulation, maximum Medi-Cal reimbursement rates for medical transportation services, and prohibits bills from exceeding charges made to the general public.

4. Requires DHCS to annually review Medi-Cal reimbursement rates for physicians and dental services, accounting for factors such as annual cost increases, based on the CPI.

FISCAL EFFECT: This bill has not yet been analyzed by the fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. The author states that unlike other healthcare providers, emergency ambulance providers are mandated to provide emergency services regardless of the patient's ability to pay. Consequently, the author explains, emergency ambulance providers deliver significant levels of uncompensated care California residents. The author contends there is presently no relationship between the current Medi-Cal payment system and the actual costs associated with delivering ambulance services, and that Medi-Cal ambulance reimbursement rates must ultimately be increased to cover the cost of medically necessary services delivered to Medi-Cal recipients. The author concludes this bill modernizes the Medi-Cal ambulance payment system to assure adequate funding for the state’s ambulance services.
   
   
   
   
   

2. BACKGROUND.
   
   

1. Medi-Cal rates for ambulance services. According to the Medi-Cal policy manual, Medi-Cal covers ambulance and other medical transportation only when ordinary public or private conveyance is medically contra-indicated and transportation is required to obtain needed medical care. To receive reimbursement, a recipient must be eligible for Medi-Cal on the date of service. Ambulance providers are instructed to use the ambulance service Basic Life Support (BLS) base rate when billing for responses to an emergency “911” call. In addition to the base rate, Medi-Cal provides additional funding for mileage, night calls, extra attendants, waiting times, certain supplies and services, and a separate reimbursement rate for non-emergency transportation for a single patient.
   
   

According to DHCS, the Medi-Cal base rate for BLS ambulance services for daytime calls was $118.20 in 1999 and remains unchanged. Non-emergency transportation for one patient $107.16 in 1999 and has also remained unchanged. Mileage was $3.55 per mile in 1999, and $3.55 per mile remains the current rate.

Pursuant to AB 97 (Committee on Budget), Chapter 3, Statutes of 2011, Medi-Cal provider rates were reduced by 10% for dates of services on and after June 1, 2011, subject to federal approval, and federal financial participation. This rate reduction was blocked by court action for many providers, but it took effect for ambulance providers in September 2013. DHCS has announced ambulance providers would not be subject to a retroactive recoupment of their rates.

2. GAO report on ambulance rates. This bill requires DHCS to establish payment rates for ground ambulance services based on changes in the CPI-U and the California weighted average GPCI, designating a federal GAO report as the evidentiary basis. The referenced 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 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 lowest population density, lower productivity (measured as number of transports furnished per staffed hour), and a greater percentage of revenues from local tax support.
   
   

3. CPI-U. The CPI-U is a measure that examines the changes in the price of a basket of goods and services purchased by urban consumers. The urban consumer population is deemed by many as a better representative measure of the general public because most of the country's population lives in highly populated areas, which represent close to 90% of the total population.  The CPI is the most frequently used statistic for identifying inflation or deflation. All variants of the CPI are cost of living indexes assessing prices in the market based on different bundles of goods and services.
   
   

4. California weighted average GPCI. The Centers for Medicare and Medicaid Services (CMS) bases physician fee schedules on Relative Value Units (RVUs), including physician work (i.e. cost of living), physician expense (i.e. cost of practice), and the cost of malpractice insurance. However, the location of physicians’ practices also affects their cost of providing services. For example, the cost of living for physicians is higher in New York City than in Utah; the cost of operating a physician practice is higher in San Francisco, California than in Sandusky, Ohio; and purchasing malpractice insurance is more expensive for a physician in Miami, Florida than for a doctor in Minneapolis, Minnesota. To account for such geographic differences in the inputs required to provide medical services, CMS uses GPCIs to adjust Medicare physician payments based on geographic differences in physician wages, practice expenses, and the price of malpractice insurance. CMS first implemented the GPCIs as part of the Medicare Physician Fee Schedule in 1992 and requires the GPCIs to be updated at least every three years. The 2015 California GPCIs are as follows:
   
   

The current language of the bill is unclear if the California weighted average GPCI required in the provisions is simply a mean of the GPCIs listed above or if there is a different preferred method of calculation.

For Medicare payments applicable to ground ambulance services, the fee schedule amount includes primarily:

1. A money amount that serves as a nationally uniform base rate, called a “conversion factor” (CF), for all ground ambulance services;
   
   

2. An RVU assigned to each type of ground ambulance service;
   
   

3. A geographic adjustment factor (GAF) for each ambulance fee schedule locality area (GPCI);
   
   

4. A nationally uniform loaded mileage rate; and,
   
   

5. An additional amount for certain mileage for a rural point-of-pickup.
   
   

1. SUPPORT. The California Primary Care Association, Paramedics Plus, and other supporters of this bill state the bill will help increase access to patients for emergency transport when it is necessary, in addition to establishing payment rates that are more in line with the economic realities of current emergency medical services costs.
   
   

2. PREVIOUS LEGISLATION.
   
   

   1. SB 1374 (Ed Hernandez) of 2014 would have required the 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 Committee Suspense File.
      
      

   2. SB 359 (Ed Hernandez) of 2011 was similar to this bill in that it 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 designated one of the two methodologies as 120% of the Medicare ambulance fee schedule. SB 359 was held on the Senate Appropriations Committee Suspense File and was later amended for another purpose.
      
      

   3. AB 678 (Pan), Chapter 397, Statutes of 2011, establishes a supplemental payment program for governmental entity providers of Medi-Cal emergency medical transportation services, based on certified public expenditures using state or local governmental entities’ funds as the required federal match.
      
      

   4. AB 2173 (Beall), Chapter 547, Statutes of 2010, established a $4 penalty on every vehicle code violation. The resulting revenue would be matched by federal funds and used to make supplemental payments for emergency air medical transportation services in the Medi-Cal program.
      
      

   5. 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 and advanced life support 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.
      
      

   6. AB 1174 (Hernandez) of 2009 would have required Medi-Cal to cover emergency basic life support and advanced life support services when a patient reasonably believes that without immediate medical attention, 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 CPI. AB 2257 (Hernandez) of 2008 was similar to AB 1174, 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.
      
      

   7. 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 and used to increase rates. AB 511 was held on the Senate Appropriations Suspense File; it was 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.
      
      

3. POLICY COMMENTS.
   
   

   1. Should Medi-Cal rates for ground ambulance services be changed? This bill addresses an important issue in that provider payment rates in Medi-Cal are a key factor in beneficiaries' ability to access program services and the ability of providers to continue to provide services. In addition, Medi-Cal ambulance providers, as part of the 911 emergency response system, are unable to “opt out” of providing services to Medi-Cal beneficiaries. Medi-Cal reimbursement rates for ambulances, as well as for many other provider types, are significantly less than Medicare rates, and rates were reduced by 10% beginning September 2013.
      
      

   2. Are both indices necessary to calculate the rates? This bill requires DHCS to establish payment rates on two indices: the CPI-U and the California weighted average GPCI. The CPI-U accounts for a change in cost of a set of general goods in urban areas. CMS currently factors for differences in more specific costs of provider practice using the GPCI. The GPCIs released by CMS already account for large urban areas within California. Thus, the Committee may wish to consider whether both indices are necessary in order to establish payment rates for ground ambulance services, or if the CMS-released California-specific GPCIs are sufficient for the purposes of this bill.
      
      

   3. Should the GAO report be used to help set rates for ambulance services? Medi-Cal reimbursement rates in California are among the lowest in the nation. This bill appears to address fee-for-service rates for those that deliver ambulance services, in part by requiring DHCS to use the 2007 GAO report on ambulance rates to establish the provider rates for these services. However, existing state and federal regulations already outline specific criteria and protocols for setting Medi-Cal reimbursement rates. It is unclear how the report would be used to help set the rates, given the need to comply with existing state and federal requirements. The Committee may wish to consider whether it is appropriate to use the report as one of the factors for establishing these provider rates.
      
      

REGISTERED SUPPORT / OPPOSITION:

Support

911 Ambulance Provider’s Medi-Cal Alliance
California Primary Care Association
California State Firefighters’ Association
Paramedics Plus

Opposition

None on file.

Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097