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 individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law authorizes certain ground emergency medical transportation providers to receive supplemental Medi-Cal reimbursement in addition to the rate of payment that the provider would otherwise receive for those services. Existing law provides that participation in the supplemental reimbursement program by an eligible provider is voluntary, and requires the nonfederal share of the supplemental reimbursement to be paid only with funds from specified governmental entities.

This bill would authorize the department to provide supplemental reimbursement under these provisions for the cost of paramedic services at a rate of payment equal to cost.

This bill would also require the department to design and implement an intergovernmental transfer (IGT) program in order to increase capitation payments to Medi-Cal managed care plans for covered ground emergency medical transportation services, as specified. The bill would require the department to implement the IGT program on January 1, July 1, 2016, or a later date if otherwise required pursuant to any necessary federal approvals obtained. The bill would provide that participation in the IGTs is voluntary on the part of the transferring entity and would require Medi-Cal managed care plans to pay 100% of any amount of increased capitation payments made to eligible providers for providing and making available ground emergency medical transportation services. services, and would permit, to the extent federal approval is obtained, the increased capitation payments to commence for dates of services on or after January 1, 2016.

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 individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law authorizes certain ground emergency medical transportation providers to receive supplemental Medi-Cal reimbursement in addition to the rate of payment that the provider would otherwise receive for those services. Existing law provides that participation in the supplemental reimbursement program by an eligible provider is voluntary, and requires the nonfederal share of the supplemental reimbursement to be paid only with funds from specified governmental entities.

This bill would make technical, nonsubstantive changes to this provision. authorize the department to provide supplemental reimbursement under these provisions for the cost of paramedic services at a rate of payment equal to cost.

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 individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law authorizes certain ground emergency medical transportation providers to receive supplemental Medi-Cal reimbursement in addition to the rate of payment that the provider would otherwise receive for those services. Existing law provides that participation in the supplemental reimbursement program by an eligible provider is voluntary, and requires the nonfederal share of the supplemental reimbursement to be paid only with funds from specified governmental entities.

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

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 534 (Pan) - Medi-Cal: ground emergency medical transportation services: supplemental reimbursement.

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 534 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 (local funds). 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 80% of Medi-Cal beneficiaries are in managed care. While actual reimbursements to government 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 low income individuals, families, and children. Medi-Cal provides coverage to childless adults and parents with household incomes up to 138 percent of the federal poverty level and to children with household incomes up to 266 percent of the federal poverty level. The federal government provides matching funds that vary from 50 percent to 90 percent of expenditures depending on the category of beneficiary.

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 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 then 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:

SB 534 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.

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.

Related Legislation:

AB 2577 (Cooley and Pan) was identical to this bill. That bill was vetoed by Governor Brown.

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.

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SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 534

SUBJECT: Medi-Cal: ground emergency medical transportation services: supplemental reimbursement

SUMMARY:

Requires the Department of Health Care Services (DHCS) to design and implement an intergovernmental transfer program for public Medi-Cal managed care ground emergency medical transport services in order to increase Medi-Cal capitation payments to Medi-Cal managed care plans for the purpose of increasing Medi-Cal reimbursement to public ground emergency medical transport services providers. Permits DHCS to provide supplemental Medicaid reimbursement for the cost of paramedic services at a rate of payment equal to cost through the use of certified public expenditures.

Existing law:

1. Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), which provides health benefits to low-income who meet specified eligibility criteria.
   
   

2. Establishes a schedule of benefits under the Medi-Cal program, which includes emergency and nonemergency medical transportation.
   
   

3. 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.
   
   

4. 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:
   
   

   1. 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);

   2. Provide evidence supporting the certification as specified by DHCS, and submit data as specified by DHCS to determine the appropriate amounts to claim as expenditures qualifying for FFP; and,

   3. 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).

5. Establishes requirements for how the supplemental reimbursement is calculated and paid.
   
   

6. 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.

7. Requires DHCS, with specified exemptions, to assess a fee of 20 percent on each intergovernmental transfer (IGT) used in Medi-Cal managed care setting to reimburse DHCS for the administrative costs of operating the IGT program and for the support of the Medi-Cal program.

This bill:

1. Permits DHCS, to the extent permitted under federal law and regulations, to provide supplemental reimbursement for the cost of paramedic services at a rate of payment equal to cost through the use of CPEs.
   
   

2. Requires DHCS to design and implement, in consultation with eligible providers, an IGT program relating to Medi-Cal managed care ground emergency medical transport services in order to increase capitation payments for the purpose of increasing Medi-Cal reimbursement to eligible providers.
   
   

3. Defines “eligible providers” as providers of ground emergency medical transport services that:
   
   

   1. Are owned or operated by the state, a city, county, city and county, fire protection district, special district, community services district, health care district, or a federally recognized Indian tribe; and,

   2. Provide ground emergency medical transport services to Medi-Cal managed care enrollees pursuant to a contract or other arrangement with a Medi-Cal managed care plan.
      
      

4. Requires DHCS to make increased capitation payments to applicable Medi-Cal managed care plans for covered ground emergency medical transportation services to the extent IGTs are voluntarily made by, and accepted from, an eligible provider, or a governmental entity affiliated with an eligible provider.
   
   

5. Requires the increased capitation payments to be in amounts actuarially equivalent to the supplemental fee-for-service payments available for eligible providers under existing law, to the extent permissible under federal law.
   
   

6. Requires all funds associated with IGTs made and accepted under this bill to be used to fund additional payments to eligible providers.
   
   

7. Requires Medi-Cal managed care plans to pay 100 percent of any amount of increased capitation payments made under this bill to eligible providers for providing and making available ground emergency medical transportation services pursuant to a contract or other arrangement with a Medi-Cal managed care plan.
   
   

8. Requires the IGT program developed under this bill to be implemented on January 1, 2016, or a later date if otherwise required pursuant to any necessary federal approvals obtained, and only to the extent IGTs from the eligible provider, or the governmental entity with which it is affiliated, are provided for this purpose. Permits DHCS to implement the IGT and increased capitation payments under this bill on a retroactive basis as needed, to the extent federal approval is obtained.
   
   

9. Makes participation in the IGT under this bill voluntary on the part of the transferring entities for purposes of all applicable federal laws.
   
   

10. Requires the IGT provisions to be implemented without any additional expenditure from the General Fund.
    
    

11. Requires each eligible provider, or the governmental entity affiliated with an eligible provider, to agree to reimburse DHCS for any costs associated with implementing this bill.
    
    

12. Prohibits IGTs made under this bill from being subject to the 20 percent administrative fee required to be assessed under existing law.
    
    

13. Requires, as a condition of participation in the IGT program under this bill, Medi-Cal managed care plans, eligible providers, and governmental entities affiliated with eligible providers to agree to comply with any requests for information or similar data requirements imposed by DHCS for purposes of obtaining supporting documentation necessary to claim federal funds or to obtain federal approvals.
    
    

14. Implements the IGT program only if and to the extent federal financial participation is available and is not otherwise jeopardized, and any necessary federal approvals have been obtained.
    
    

15. Grants the DHCS director the discretion to return or not accept an IGT, and to adjust payments made under this bill as necessary to comply with federal Medicaid requirements, to the extent the DHCS director determines that the payments made under the IGT program under this bill do not comply with federal Medicaid requirements.
    
    

16. Permits, to the extent federal approval is obtained, the increased capitation payments under this bill to commence for dates of service on or after January 1, 2016.
    
    

17. Permits the authority to implement, interpret, or make specific this bill by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action under the Administrative Procedure Act.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, much of California’s population receives emergency ambulance services from local governments. Many Californians relay on the state Medi-Cal program to provide for their medical care, of which emergency ambulance service is a vital part of the health care safety net. The Medi-Cal program, although an important part of keeping California, healthy falls short of meeting the true cost of providing that vital emergency ambulance service. The average Medi-Cal reimbursement for emergency ambulance transport across the state is approximately $120 while the cost to provide those services can range from $498 - $1,200 depending on region. With the downturn in the economy, many of California’s public emergency ambulance providers have seen significant and drastic financial cuts that have negatively impacted their ability to provide both the fire protection and emergency medical services their communities have relied and become accustomed too. This bill will allow qualified public ground emergency transportation providers to draw down federal matching funds to help offset the gap between the amounts paid through Medi-Cal and the true cost of providing those services. This amount, estimated at nearly $350 million dollars annually will flow back into local government public safety and allow the continued provision of those services the public enjoys. This bill will accomplish this at no cost to the state General Fund.
   
   

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 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.
   
   Federal approval of the ground emergency medical transportation State Plan Amendment (SPA) was granted in September 2013 for services provided to Medi-Cal beneficiaries on or after January 30, 2010. The supplemental reimbursement authorized by the SPA are for uncompensated care costs incurred by eligible providers for providing ground emergency medical transportation services to Medi-Cal beneficiaries for costs that are in excess of the payment made to each provider for services providing to Medi-Cal beneficiaries.
   
   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. Prior legislation. AB 2577 (Cooley and Pan), of 2014, was similar to this bill. AB 2577 was vetoed by the Governor. In his veto message, the Governor stated that while he supported funding mechanisms that would increase the availability of federal funds, AB 2577 presented significant policy and implementation challenges at a time when DHCS is working at full capacity on several new and critical priorities integrating the Affordable Care Act into the state’s health care system. The Governor’s veto message directed DHCS to continue conversations on this funding mechanism that reflects a more realistic time frame and is more workable for DHCS.
   
   SB 1374 (Hernandez), of 2014, 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 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, 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.

5. Related legislation. SB 243 (Hernandez), and AB 366 (Bonta), would increase Medi-Cal provider rates, including increase Medi-Cal transportation provider rates to Medicare levels.
   
   AB 1257 (Gray), requires DHCS to establish payment rates for ground ambulance services based on changes in the Consumer Price Index-Urban and the California weighted average Geographic Practice Cost Index, and to designate the ambulance cost study conducted by the federal Government Accountability Office described above as the evidentiary base. AB 1257 is scheduled for hearing in the Assembly Health Committee on April 28, 2015.
   
   

6. Support. This bill is co-sponsored by the California Fire Chiefs Association, the California Metro Fire Chiefs, and the California Professional Firefighters which states 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 will allow those entities that provide ground emergency medical transportation 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 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.
   
   The California State Firefighters’ Association (CSFA) writes in support that this bill will bring millions of dollars to cash-strapped communities to provide emergency medical transportation services.
   
   

7. Bill implementation date. This bill requires the IGT program developed under this bill to be implemented on January 1, 2016, or a later date if otherwise required pursuant to any necessary federal approvals obtained. The Governor’s veto message directed DHCS to continue conversations on this funding mechanism that reflects a more realistic time frame and is more workable for DHCS. The author may wish to consider moving back the IGT program to a date later than January 1, 2016 as this bill does not take effect until that date and in light of the Governor’s veto message.
   
   

SUPPORT AND OPPOSITION:

Support: California Fire Chiefs Association (co-sponsor)

California Metro Fire Chiefs (co-sponsor)

California Professional Firefighters (co-sponsor)

Association of California Healthcare Districts

California State Firefighters’ Association

Paramedics Plus

Oppose: None received

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