Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 establishes a quality assurance fee program for skilled nursing and intermediate care facilities, as prescribed.

This bill, commencing July 1, 2018, and subject to federal approval and the availability of federal financial participation, would impose a quality assurance fee for each emergency medical transport provided by an emergency medical transport provider, as defined, subject to the quality assurance fee in accordance with a prescribed methodology. The bill would authorize the Director of Health Care Services to exempt categories of emergency medical transport providers from the quality assurance fee if necessary to obtain federal approval. The bill would require the Director of Health Care Services to deposit the collected quality assurance fee into the Medi-Cal Emergency Medical Transport Fund, which the bill would create in the State Treasury, to be continuously appropriated, thereby making an appropriation, to the department to be used exclusively in a specified order of priority to enhance federal financial participation for ambulance services under the Medi-Cal program, and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. The bill would require each emergency medical transport provider to report to the department data on the number of actual emergency medical transports by payer type and on gross receipts, as defined, in accordance with a specified timeline in a manner and form prescribed by the department. The bill would authorize the department to establish an Internet Web site for the submission of these data reports. The bill would authorize the department to require a certification by each emergency medical transport provider, under penalty of perjury, of the truth of these data reports. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program. The bill would authorize the department, upon written notice to the emergency medical transport provider, to impose a $100 per day penalty, to be deposited into the Medi-Cal Emergency Medical Transport Fund, against the provider for each day that the provider fails to make a report within 5 business days of the date upon which the data report was due.

The bill, commencing July 1, 2018, and subject to federal approval and the availability of federal financial participation, would increase the Medi-Cal reimbursement to emergency medical transport providers for emergency medical transports, including both fee-for-service transports paid by the department and managed care transports paid by Medi-Cal managed care health plans, as specified.

The bill would authorize the department to implement, interpret, or make specific these provisions by means of provider bulletins, plan letters, or other similar instructions.

The bill would authorize the director to decide to not implement these provisions in any state fiscal year if, before June 1 preceding the start of an applicable state fiscal year, he or she finds that the implementation is likely no longer a benefit to the General Fund for the applicable state fiscal year. The bill would provide that the provisions of the bill shall cease to be operative on the first day of the state fiscal year beginning on or after the date one or more of certain conditions, including withdrawal of federal approval, are satisfied. The bill would authorize the department to conduct appropriate close-out activities if these provisions become inoperative, and would repeal these provisions when those activities have been completed and the director notifies specified state entities.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 establishes a quality assurance fee program for skilled nursing and intermediate care facilities, as prescribed.

This bill, commencing July 1, 2018, and subject to federal approval and the availability of federal financial participation, would impose a quality assurance fee for each emergency medical transport provided by an emergency medical transport provider, as defined, subject to the quality assurance fee in accordance with a prescribed methodology. The bill would authorize the Director of Health Care Services to exempt categories of emergency medical transport providers from the quality assurance fee if necessary to obtain federal approval. The bill would require the Director of Health Care Services to deposit the collected quality assurance fee into the Medi-Cal Emergency Medical Transport Fund, which the bill would create in the State Treasury, to be continuously appropriated, thereby making an appropriation, to the department to be used exclusively in a specified order of priority to enhance federal financial participation for ambulance services under the Medi-Cal program, and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. The bill would require each emergency medical transport provider to report to the department data on the number of actual emergency medical transports by payer type and on gross receipts, as defined, in accordance with a specified timeline in a manner and form prescribed by the department. The bill would authorize the department to establish an Internet Web site for the submission of these data reports. The bill would authorize the department to require a certification by each emergency medical transport provider, under penalty of perjury, of the truth of these data reports. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program. The bill would authorize the department, upon written notice to the emergency medical transport provider, to impose a $100 per day penalty, to be deposited into the Medi-Cal Emergency Medical Transport Fund, against the provider for each day that the provider fails to make a report within 5 business days of the date upon which the data report was due.

The bill, commencing July 1, 2018, and subject to federal approval and the availability of federal financial participation, would increase the Medi-Cal reimbursement to emergency medical transport providers for emergency medical transports, including both fee-for-service transports paid by the department and managed care transports paid by Medi-Cal managed care health plans, as specified.

The bill would authorize the department to implement, interpret, or make specific these provisions by means of provider bulletins, plan letters, or other similar instructions.

The bill would authorize the director to decide to not implement these provisions in any state fiscal year if, before June 1 preceding the start of an applicable state fiscal year, he or she finds that the implementation is likely no longer a benefit to the General Fund for the applicable state fiscal year. The bill would provide that the provisions of the bill shall cease to be operative on the first day of the state fiscal year beginning on or after the date one or more of certain conditions, including withdrawal of federal approval, are satisfied. The bill would authorize the department to conduct appropriate close-out activities if these provisions become inoperative, and would repeal these provisions when those activities have been completed and the director notifies specified state entities.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 establishes a quality assurance fee program for skilled nursing and intermediate care facilities, as prescribed.

This bill, commencing July 1, 2018, and subject to federal approval, approval and the availability of federal financial participation, would impose a quality assurance fee for each emergency medical transport provided by an emergency medical transport provider, as defined, subject to the quality assurance fee in accordance with a prescribed methodology. The bill would authorize the director Director of Health Care Services to exempt categories of emergency medical transport providers from the quality assurance fee if necessary to obtain federal approval. The bill would require the Director of Health Care Services to deposit the collected quality assurance fee into the Medi-Cal Emergency Medical Transport Fund, which the bill would create in the State Treasury, to be continuously appropriated, thereby making an appropriation, to the department to be used exclusively in a specified order of priority to enhance federal financial participation for ambulance services under the Medi-Cal program, and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. The bill would require each emergency medical transport provider to report to the department data on the number of actual emergency medical transports by payer type and on gross receipts, as defined, in accordance with a specified timeline in a manner and form prescribed by the department. The bill would authorize the department to establish an Internet Web site for the submission of these data reports. The bill would authorize the department to require a certification by each emergency medical transport provider, under penalty of perjury, of the truth of these data reports. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program. The bill would authorize the department, upon written notice to the emergency medical transport provider, to impose a $100 per day penalty penalty, to be deposited into the Medi-Cal Emergency Medical Transport Fund, against the provider for each day that the provider fails to make a report within 5 business days of the date upon which the data report was due.

The bill, commencing July 1, 2018, and subject to federal approval, approval and the availability of federal financial participation, would increase the Medi-Cal reimbursement to emergency medical transport providers for emergency medical transports, including both fee-for-service transports paid by the department and managed care transports paid by Medi-Cal managed care health plans, as specified.

The bill would authorize the department to adopt regulations as necessary to implement these provisions, as specified. implement, adopt, interpret, or make specific these provisions by means of provider bulletins, plan letters, or other similar instructions.

The bill would authorize the director to decide to not implement these provisions in any state fiscal year if, before June 1 preceding the start of an applicable state fiscal year, he or she finds that the implementation is likely no longer a benefit to the General Fund for the applicable state fiscal year. The bill would provide that the provisions of the bill shall cease to be implemented if any of operative on the first day of the state fiscal year beginning on or after the date one or more of certain conditions, including withdrawal of federal approval, are satisfied. The bill would authorize the department to conduct appropriate close-out activities if these provisions become inoperative, and would repeal these provisions when those activities have been completed and the director notifies specified state entities.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 establishes a quality assurance fee program for skilled nursing and intermediate care facilities, as prescribed.

This bill, commencing July 1, 2018, and subject to federal approval, would impose a quality assurance fee for each emergency medical transport provided by an emergency medical transport provider, as defined, subject to the quality assurance fee in accordance with a prescribed methodology. The bill would authorize the director to exempt categories of emergency medical transport providers from the quality assurance fee if necessary to obtain federal approval. The bill would require the Director of Health Care Services to deposit the collected quality assurance fee into the Medi-Cal Emergency Medical Transport Fund, which the bill would create in the State Treasury, to be continuously appropriated, thereby making an appropriation, to the department to be used exclusively in a specified order of priority to enhance federal financial participation for ambulance services under the Medi-Cal program, and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. The bill would require each emergency medical transport provider to report to the department data on the number of actual emergency medical transports by payer type and on gross receipts, as defined, in accordance with a specified timeline in a manner and form prescribed by the department. The bill would authorize the department to establish an Internet Web site for the submission of these data reports. The bill would authorize the department to require a certification by each emergency medical transport provider, under penalty of perjury, of the truth of these data reports. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program. The bill would authorize the department, upon written notice to the emergency medical transport provider, to impose a $100 per day penalty against the provider for each day that the provider fails to make a report within 5 business days of the date upon which the data report was due.

The bill, commencing July 1, 2018, and subject to federal approval, would increase the Medi-Cal reimbursement to emergency medical transport providers for emergency medical transports, including both fee-for-service transports paid by the department and managed care transports paid by Medi-Cal managed care health plans, as specified.

The bill would authorize the department to adopt regulations as necessary to implement these provisions, as specified.

The bill would provide that the provisions of the bill shall cease to be implemented if any of certain conditions, including withdrawal of federal approval, are satisfied.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 establishes a quality assurance fee program for skilled nursing and intermediate care facilities, as prescribed.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, 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 requires the department to implement specified provisions of federal law to provide Medi-Cal benefits to an individual until his or her 26th birthday if he or she was in foster care on his or her 18th birthday or any higher age the state has elected under federal law. Existing law requires the department to implement the federal option to provide Medi-Cal benefits to individuals who were in foster care and enrolled in Medicaid in any state, as provided.

This bill would make technical, nonsubstantive changes to these provisions.

 UNFINISHED BUSINESS  

Bill No: SB 523

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 7-1, 4/19/17

AYES: Hernandez, Atkins, Leyva, Mitchell, Monning, Nielsen, Roth

NOES: Nguyen

NO VOTE RECORDED: Newman

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Nielsen, Wiener

NO VOTE RECORDED: Bates

SENATE FLOOR: 38-1, 5/30/17

AYES: Allen, Anderson, Atkins, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NOES: Nguyen

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 72-4, 9/7/17 - See last page for vote

SUBJECT:

SOURCE: 911 Ambulance Provider’s Medi-Cal Alliance

DIGEST:

This bill imposes a quality assurance fee (QAF) on each transport provided by an emergency medical transport (EMT) provider in accordance with a prescribed methodology. This bill requires the resulting revenue to be placed in a continuously appropriated fund to be used to provide an add-on increase to the Medi-Cal fee-for-service (FFS) EMT rate for three emergency transport reimbursement codes, to pay for state administrative costs, and to provide funding for health care coverage for Californians. This bill takes effect immediately as an urgency bill.

Assembly Amendments

(1) require the amount of revenue from the fee that is used to pay for health care coverage to be 10% of the fee amount, instead of $3 million in the Senate-approved version of this bill; (2) require the Medi-Cal ambulance increase to be an add-on payment increase to the Medi-Cal FFS payment schedule for the three billing codes; (3) require, in the event of a merger, acquisition, or similar transaction involving an EMT provider that has outstanding QAF payment obligations, the resultant or successor EMT provider to be responsible for paying the full amount of outstanding QAF payments, including any applicable interest and penalties; (4) permit the Department of Health Care Services to seek federal approval to implement any add-on increase to the FFS payment schedule for any state fiscal year or years, as applicable, on a time-limited basis for a fixed program period, as determined by the Department; and (5) require the add-on increase to the FFS payment schedule to only be required and payable for state fiscal years for which a QAF payment obligation exists for EMT providers.

ANALYSIS:

Existing law:

1. Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), which provides health benefits to low-income individuals who meet specified eligibility criteria.
2. Establishes a schedule of benefits under the Medi-Cal program, which includes emergency and non-emergency medical transportation. Establishes, through regulation, maximum Medi-Cal reimbursement rates for medical transportation services, and prohibits the amount billed from exceeding charges made to the general public.
3. Reduces specified Medi-Cal provider rates (including ground ambulance services), effective June 1, 2011, by 10% for dates of services on and after June 1, 2011, subject to federal approval, federal financial participation (FFP), and the reduction meeting federal Medicaid requirements. The 10% reduction took effect for ambulance providers for dates of service on or after September 5, 2013, but was not applied retroactively back to June 2011.

This bill:

1. Imposes a QAF, commencing with the state fiscal quarter beginning on July 1, 2018, and continuing each state fiscal quarter thereafter, for each EMT provided by each EMT provider subject to the QAF.
2. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15th thereafter while this bill is in effect, to calculate the annual QAF rate applicable to the following state fiscal year based on the most recently collected data collected from EMT providers.
3. Establishes a formula for calculating the QAF rate in the first year, and a separate formula for state fiscal years beginning July 1, 2019, and thereafter. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15 thereafter, to publish the annual QAF rate on its Internet Web site.
4. Prohibits the QAF calculated and collected from exceeding the amounts allowable under federal law. Permits the DHCS director, if on or before June 15 of each year, if he or she makes a determination that the QAF collected exceeds the amounts allowable under federal law, to reduce the add-on increase to the Medi-Cal FFS payment schedule increase in this bill only to the extent necessary to reflect the amount of fees allowable under federal law in an applicable state fiscal year.
5. Requires the DHCS director, if during a state fiscal year, the actual or projected available QAF amount exceeds or is less than the actual or projected aggregate QAF schedule amount by more than 1%, to adjust the annual QAF rate so that the available QAF amount for the state fiscal year is approximately equal to the aggregate QAF schedule amount for the state fiscal year. (This permits DHCS to adjust the QAF rate amount paid by medical transport providers to account for the amount needed to pay for the add-on Medi-Cal rate.)
6. Requires the available QAF fee amount for a state fiscal year to be considered to equal the aggregate fee schedule amount for the state fiscal year if the difference between the available fee amount for the state fiscal year and the aggregate fee schedule amount for the state fiscal year constitutes less than 1% of the aggregate fee schedule amount for the state fiscal year.
7. Establishes a remittance due date for the first year based on the size of the EMT provider, on-going remittance due dates, interest penalties for late payments and deductions of unpaid fees and interest from Medi-Cal payments.
8. Requires DHCS to deposit the QAF collected in the continuously appropriated Medi-Cal Emergency Medical Transport Fund (Fund), which is created in the State Treasury by this bill. Requires the Fund to also include interest and dividends earned on moneys in the Fund.
9. Requires moneys in the Fund to be available exclusively to enhance FFP for ambulance services under the Medi-Cal program and to provide additional reimbursement to, and to support quality improvement efforts of, EMT providers, to pay for the state’s administrative costs and to provide funding for health care coverage for Californians, in the following order of priority:
   1. To pay for DHCS staffing and administrative costs directly attributable to implementing this bill, not to exceed for the 2018–19 state fiscal year, $1,003,000, exclusive of any federal matching funds, and for the 2019–20 state fiscal year and thereafter, $374,000, exclusive of any federal matching funds;
   2. To pay for the health care coverage in each state fiscal year in the amount of 10% of the fee amount, exclusive of any federal matching funds; and,
   3. To make increased payments to EMT providers pursuant to this bill.
10. Requires, commencing July 1, 2018, and for each state fiscal year thereafter, reimbursement to EMT providers for EMTs to be increased by application of an add-on to the associated Medi-Cal FFS payment schedule. Requires the add-on increase to the FFS payment schedule to be calculated on or before June 15, 2018, and to remain the same for later state fiscal years for which this bill is operative, to the extent DHCS determines federal financial participation is available and is not otherwise jeopardized.
11. Requires DHCS to calculate the required projections based on the data submitted under this bill. Requires the Medi-Cal FFS add-on to be equal to the quotient of the available fee amount projected by DHCS on or before June 15, 2018, for the 2018–19 state fiscal year, divided by the total Medi-Cal EMTs, including both FFS transports paid by DHCS and Medi-Cal managed care transports, utilizing these billing codes projected by DHCS on or before June 15, 2018, for the 2018–19 state fiscal year. Requires the resulting FFS payment schedule amounts after the application of this bill to be equal to the sum of the Medi-Cal FFS payment schedule amount for the 2015–16 state fiscal year and the add-on increase.
12. Requires each Medi-Cal managed care health plan to satisfy its obligation under a specified provision of federal Medicaid regulations to provide payment to non-contract EMT providers consistent with federal law that requires the amount a non-contracting emergency providers could collect in Medi-Cal payment is the FFS Medi-Cal rate with the application of the add-on payment.
13. Requires the increased payments authorized by this bill to be funded solely from the following:
    1. The QAF, along with any interest or other investment income thereon;
    2. Federal reimbursement and any other related federal funds; and,
    3. The proceeds of the QAF, the matching amount provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for EMTs provided by EMT providers and not to supplant this funding.
14. Requires, if there is a delay in the implementation of this bill for any reason, both of the following to apply:
    1. Permits an EMT provider subject to the fee to not pay the fee until the FFS payment schedule increases in this bill are approved. Requires the DHCS director to establish a schedule for payment of retroactive fees in consultation with EMT providers to minimize the disruption to the cash flow of EMT providers; and,
    2. Permits DHCS to retroactively implement the add-on increase to the fee-for-service payment schedule to the extent DHCS determines that federal financial participation is available and is not otherwise jeopardized.
15. Permits DHCS to implement this bill, in whole or in part, by means of a provider bulletin, or other similar instructions, without taking regulatory action.
16. Permits the DHCS director to modify or make adjustments to any methodology, fee amount, or other provision in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires the DHCS director, after consulting with affected EMT providers, determines that a modification is needed, to execute a declaration stating that this determination has been made.
17. Permits the DHCS to add categories of exempt EMT providers or apply a non-uniform fee per transport to EMT providers that are subject to the QAF in order to meet requirements of federal law or regulations. Permits the DHCS director to exempt categories of EMT providers from the fee if necessary to obtain federal approval.
18. Permits the DHCS director, before June 1 preceding the start of an applicable state fiscal year, if the director finds that the implementation of this bill is likely no longer a benefit to the General Fund for the applicable state fiscal year, to decide to not implement this bill for that state fiscal year. Requires the DHCS director to notify the appropriate fiscal and policy committees of the Legislature, and EMT providers individually and via DHCS’ Internet Web site of its finding.
19. Requires this bill to be implemented and to cease to be implemented if specified conditions are met.

Comments

1. Author’s statement. According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state General Fund (GF). In addition, 10% of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot “opt out” or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix.

While the costs to provide essential ambulance services has significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill will significantly increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs.

1. Medi-Cal rates for ambulance services. Medi-Cal covers emergency medical transportation when necessary to obtain Medi-Cal covered benefits when a beneficiary’s medical or physical condition is acute and severe, necessitating immediate diagnosis and treatment so as to prevent death or disability. When billing Medi-Cal for a “911 call,” ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services. Medi-Cal FFS emergency base ambulance rates were increased in 1997 and 1998 and were last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%) pursuant to AB 97 (Committee on Budget, Chapter 3, Statutes of 2011). The ambulance rate reduction was not imposed retroactively but did apply prospectively, beginning on September 5, 2013. The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee:

1. One-time costs of $1.2 million and ongoing administrative costs of $750,000 annually (Medi-Cal Emergency Medical Transport Fund/federal) for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the fee, and make increased payments. This bill provides that $1.003 million in the first year and $374,000 per year thereafter must be available to DHCS for administrative costs (the state would be able to draw down additional federal funding to help cover the administrative costs).
2. Based on data provided by EMT providers, staff assumes costs associated with fee collection and payment as follows:
   1. Ongoing GF benefit of about $3.2 million per year through reduced GF health care spending. This bill provides that 10% of revenue collected (after setting aside administrative funding) is available to the state for health care coverage. Thus, this bill reduces the need for GF support of the Medi-Cal program by an equal amount.
   2. Additional payments of about $74 million per year for Medi-Cal EMT services (Medi-Cal Emergency Medical Transport Fund/ federal). The QAF is projected to generate nearly $30 million per year in revenues (after accounting for administration and a 10% set-aside for state health care coverage). With federal matching funds, about $73 million per year would be paid in increased reimbursements to providers.

SUPPORT: (Verified 9/6/17)

911 Ambulance Provider’s Medi-Cal Alliance (source)

Alameda County Board of Supervisors

American Medical Response

California Ambulance Association

California Hospital Association

Hall Ambulance Service Incorporated

McCormick Ambulance

Paramedics Plus

OPPOSITION: (Verified 9/7/17)

Advantage Ambulance

AmbuServe Ambulance Service

Antelope Ambulance Service

Guardian Ambulance Service

Liberty Ambulance

Lynch Ambulance

Medic 1 Ambulance

MedReach Ambulance

Mission Ambulance

PRN Ambulance

ProTransport-1 Ambulance

Shoreline Ambulance

ARGUMENTS IN SUPPORT: This bill is sponsored by the 911 Ambulance Provider’s Medi-Cal Alliance (911 Alliance), which writes that in 2015, the leadership of six of California's largest private ambulance companies came together to discuss Medi-Cal reimbursement rates for emergency ambulance transports and formed the 911 Ambulance Provider's Medi-Cal Alliance with a mission to work together to help resolve the ongoing issue of low Medi-Cal reimbursement rates.

The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for emergency transports in nearly 20 years, and in those intervening years since the last increase, they have twice seen their Medi-Cal rates decreased. In those intervening years, employee wages continue to grow, fuel prices have skyrocketed, health care costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill addresses nearly two decades of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing emergency medical transportation.

ARGUMENTS IN OPPOSITION: Antelope Ambulance Service, AmbuServe Ambulance Service, and Guardian Ambulance Service write in opposition that the tax imposed by this bill results in their being taxed, and the resulting revenue being redistributed to their competitors. Opponents argue they will receive little to no additional funds for Medi-Cal transports, and the non-emergency ambulance providers are being taxed to subsidize the income for Medi-Cal transports for 911 ambulance providers.

ASSEMBLY FLOOR: 72-4, 9/7/17

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Chu, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Rendon

NOES: Travis Allen, Lackey, Muratsuchi, Obernolte

NO VOTE RECORDED: Choi, Cooley, Wood

Prepared by:

9/8/17 15:28:13

**** END ****

SENATE THIRD READING

STR Bill Id:SB 523

Author:(Hernandez)

As Amended Ver:August 22, 2017

2/3 vote. Urgency

SENATE VOTE: 38-1

SUMMARY: Imposes a quality assurance fee (QAF) for each emergency medical transport (EMT) provided by an emergency medical transport provider (EMTP), pursuant to a prescribed methodology. Specifically, this bill:

1. Imposes a QAF for each EMT provided by each EMTP commencing with the state fiscal year (SFY) beginning on July 1, 2018, and continuing each state fiscal quarter.
2. Requires each EMTP to report quarterly to the Department of Health Care Services (DHCS), the data on the number of actual EMTs by payer type, including without limitation, Medi-Cal fee-for-service (FFS) EMTs and Medi-Cal managed care EMTs, as follows:
   1. For each quarter beginning on July 1, 2015, through the quarter beginning on July 1, 2017, inclusive, the data is required to be submitted on or before October 15, 2017; and,
   2. For the quarter beginning on October 1, 2017 and continuing each quarter thereafter, the data is required to be submitted on or before the 45^th day after the last day of the applicable quarter.
3. Requires each EMTP to report to DHCS, the data on the gross receipts received from the provision of EMTs per SFY, as follows:
   1. For SFYs beginning on July 1, 2015, and July 1, 2016, the data is required to be submitted on or before October 15, 2017; and,
   2. For each SFY beginning on July 1, 2017 and continuing each fiscal year thereafter for which this bill is implemented, the data is required to be submitted on or before the 45^th day after the last day of the applicable state fiscal year.
4. Requires the Director of DHCS (Director), on or before June 15, 2018, and continuing each June 15 thereafter for which this bill is implemented, to calculate the annual QAF rate applicable to the following SFY based on the most recently collected data from EMTPs. Authorizes the Director to correct any identified material or significant errors in the data collected from EMTPs for purposes of calculating the annual QAF. Provides that the Director's determination whether to exercise discretion to correct any data is not subject to judicial review, except that a writ of mandate may be brought by an EMTP, as specified.
   1. For the SFY beginning on July 1, 2018, the annual QAF rate is to be calculated by multiplying the projected total annual gross receipts for all EMTPs subject to the fee by 5.1%, then the resulting product is to be divided by the projected total annual EMTs by all EMTPs subject to the QAF for the SFY; and,
   2. For SFY beginning July 1, 2019, and continuing each SFY thereafter, the annual QAF is to be calculated by a ratio, as specified.
5. Requires the Director on or before June 15, 2018, and continuing each June 15 thereafter for which this bill is implemented, to publish the annual QAF rate on its Internet Website.
6. Prohibits the fees collected under this bill from exceeding the amounts allowed under federal law, as specified. Authorizes the Director of DHCS to: a) reduce the add-on increase to the FFS payment schedule, as specified in 18) below, only to the extent necessary to reflect the amount of fees allowable under federal law in an applicable SFY.
7. Requires the Director to adjust the annual QAF rate if the fee amount exceeds or is less than the actual or projected aggregate schedule amount by more than one percent, as specified.
8. Requires each EMTP to remit to DHCS an amount equal to the annual QAF rate for the 2018-19 SFY multiplied by the number of EMTs reported or should have been reported pursuant to 2) above, based on a schedule established by the Director of DHCS.
9. Establishes a remittance due date for the first year based on the size of the EMTP.
10. Requires each EMTP to remit to DHCS the QAF each SFY quarter beginning on October 1, 2018, as specified. Requires interest to be assessed on the QAF not paid on the date the QAF is due at the greater of 10% per annum or the rate at which DHCS assesses interest on Medi-Cal program overpayments, as specified, and to be deposited in the Medi-Cal Emergency Medical Transport Fund (Fund).
11. Authorizes DHCS to deduct the unpaid fee and interest owed from any Medi-Cal reimbursement payments owed to the EMTP if any fee payment is more than 60 days overdue, as specified, and upon written notification to the EMTP and taking into account the financial condition of the EMTP.
12. Authorizes a penalty for any fee payment that is more than 60 days overdue equal to the amount in 10) above. Requires any funds resulting from this penalty to be deposited into the Fund.
13. Permits the Director to waive a portion or all of either the interest specified in 10) above, or the penalties in 12) above, or both, upon determination that the EMTP has demonstrated that imposition of the full amount of the QAF under the timelines specified in this bill has a high likelihood of creating an undue financial hardship for the provider. Conditions the waiver on the EMTP's agreement to make fee payments on an alternative schedule developed by DHCS.
14. Requires DHCS to do the following:
    1. Establish the manner and format for EMTPs to report the data specified by this bill;
    2. Accept an EMTP's payment even if the payment is submitted in a rate year subsequent to the rate year in which the QAF was assessed; and,
    3. Deposit the QAF in the Fund, created under this bill and is to be continuously appropriated.
15. Establishes the Fund to support quality improvement efforts of EMTPs, to pay for the state's administrative costs, and to provide funding for health care coverage for Californians, in the following order of priority:
    1. To pay DHCS staffing and administrative costs directly attributable to implementing this bill, not to exceed the following amounts:
       1. For the 2018-19 SFY: $1,003,000, exclusive of any federal matching funds;
       2. For the 2019-20 SFY and each SFY thereafter: $374,000.
    2. To pay for the health care coverage in each applicable SFY in the amount of 10% of the annual QAF collection amount, exclusive of any federal matching fund; and,
    3. To make increased payment to EMTPs under this bill.
16. Provides that in the event of a merger, acquisition, or similar transaction involving an EMTP that has outstanding QAF payment obligations, including any penalties or interest amounts owed, the resultant or successor EMTP is responsible for paying the full amount of outstanding QAF payments, as specified. Authorizes an entity considering these types of transactions to submit a request to ascertain the outstanding QAF payment obligations, as specified.
17. Authorizes DHCS to establish an Internet Website for the submission of the reports, and to require a certification by each EMTP of the truth of the reports submitted. Authorizes DHCS to impose a penalty of $100 per day against an EMTP every day for failure to make the required report within five days of the date upon which the report was due. Provides that any funds resulting from this penalty be deposited into the Medi-Cal EMTP Fund.
18. Requires that commencing July 1, 2018, and for each SFY thereafter for which this bill is operative, reimbursement to EMTPs for EMTs be increased by application of an add-on to the associated Medi-Cal FFS payment schedule. Requires the calculation of the add-on increase on or before June 15, 2018, and to remain the same for later SFYs for which this bill is operative, to the extent DHCS determines federal financial participation is available and is not otherwise jeopardized. Requires the add-on increase to only apply to the following billing codes: A0429 BLS Emergency, A0427 ALS Emergency, and A0433 ALS2, as defined.
19. Requires DHCS to calculate the projections for the payment schedule to be based on data submitted under 2) and 3) above, and specifies that the resulting FFS payment schedule amounts be equal to the sum of the Medi-Cal FFS payment schedule amount for the 2015-SFY and the add-on increase, as specified.
20. Requires each Medi-Cal managed care health plan to satisfy its federal obligation for EMTs and provide payment to noncontract EMTPs, as specified. Specifies, effective July 1, 2018, and for each SFY thereafter for which this bill is operative, the amounts a noncontract EMTP could collect if the beneficiary received medical assistance other than through enrollment in a Medi-cal managed health plan.
21. Requires the increased payments to be funded solely from the following:
    1. The QAF under this bill, along with any interest or other investment income; and,
    2. Federal reimbursement and any other related federal funds.
22. Requires the proceeds of the QAF, the matching amount provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for EMTPs and not to supplant this funding.
23. Authorizes DHCS to seek federal approval to implement any add-on increase to the FFS payment schedule for any SFY, on a time-limited basis for a fixed program period, as determined by DHCS. Specifies that the add-on increase to the FFS payment schedule only be required and payable for SFYs for which the QAF payment obligation exists for EMTPs.
24. Provides that if there is a delay in the implementation of the provisions of this bill, the following applies:
    1. An EMTP subject to the fee may be assessed the amount the provider would be required to pay to DHCS if the add-on increase to the FFS payment schedule were already approved, but shall not be required to pay the fee until the add-on increase to the FFS payment schedule is approved. Requires the Director to establish a schedule for payment of retroactive fees in consultation with EMTPs to minimize the disruption to the cash flow of EMTPs; and,
    2. Permits DHCS to retroactively implement the add-on increase to the FFS payment schedule to the extent it determines that Federal Financial Participation (FFP) is available and is not otherwise jeopardized.
25. Authorizes DHCS to implement, interpret or make specific this bill, through provider bulletins, plan letters or other similar instructions, without taking regulatory action. Requires DHCS to provide notice to the Legislature within 10 business days when this action is taken.
26. Requires DHCS to request any approval from the Centers for Medicare and Medicaid Services (CMS) it deems necessary for the use of the QAF and for the purpose of receiving associated federal matching funds. Authorizes DHCS to request a waiver of the broad-based or uniformity requirements of federal law that authorizes imposition of healthcare related provider taxes, or any other provisions of federal law or regulation necessary to implement this bill. Implements this bill only to the extent that any necessary federal approvals are obtained and FFP is available and is not otherwise jeopardized.
27. Permits the Director to modify or make adjustments to any methodology, fee amount or other provision in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires the Director, if after consulting with affected EMTPs determines that a modification is needed, to execute a declaration stating that this determination has been made and that the actual or projected available fee amount for a SFY remains approximately equal to the actual or projected aggregate fee schedule amount for each SFY, as specified, and to provide a copy, within five working days of the execution of the declaration, to the appropriate legislative fiscal and policy committees.
28. Permits the Director to add categories of exempt EMTPs or apply a non-uniform fee per EMT to EMTPs that are subject to the QAF in order to meet requirements of federal law or regulations. Permits the Director to exempt categories of EMTPs from the QAF if necessary to obtain federal approval.
29. Permits the Director of DHCS, if before June 1 preceding the start of an applicable SFY, the Director finds that that implementation of this bill is likely no longer a benefit to the General Fund for the applicable SFY, to not implement this bill for that SFY. Requires the Director to give notice to the Legislature and EMTP individually and via the department's Internet Website of this finding, as specified.
30. Requires implementation of this bill under all of the following conditions:
    1. CMS does not determine that the QAF revenues may not be used for purposes set forth in this bill;
    2. The DHCS obtains any necessary federal approvals for the collection of the QAF and the add-on increase to the FFS payment schedule,
    3. The state continues its maintenance of effort for the level of state funding not derived from the QAF of EMTs reimbursement for the 2018-19 rate year, and for each applicable rate year thereafter, in an amount not less than the amount that the state would have paid for the same number of EMTs under the rate methodology that was in effect on July 31, 2016; and,
    4. Federal financial participation is available, and is not otherwise jeopardized.
31. Ceases operation of this bill under one or more of the following conditions:
    1. CMS no longer allows the collection or use of EMTP assessment as set forth in this bill;
    2. The increase to the Medi-Cal payments no longer remains in effect;
    3. The QAF assessed and collected is no longer available for the purposes of this bill;
    4. The Director of DHCS determines that a change in federal law or federal Medicaid policy results or is likely to result in a reduction of associated FFP for the Medi-Cal program such that the Director determines that continued implementation of this bill is no longer a benefit to the General Fund;
    5. A final judicial determination is made by the California Supreme Court or any California Court of Appeal that the revenues collected pursuant to this bill that are deposited in the Fund are either "General Fund proceeds of taxes appropriated pursuant to Article XIII B," or "allocated local proceeds of taxes," as used in the California Constitution for purposes of Proposition 98 of 1988, the school funding guarantee;
    6. A final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the administrator of the federal Centers for Medicare and Medicaid Services that is not appealed, that federal financial participation is not available with respect to any payment made under the methodology implemented pursuant to this bill; or
    7. The state does not continue its maintenance of effort for the level of state funding of EMTs reimbursement for the 2018-19 SFY year, or for any subsequent SFY year, in an amount not less than the amount that the state would have paid for the same number of EMTs under the rate methodology in effect on July 31, 2016.
32. Provides that if any of the conditions listed in 31) above, is satisfied, the Director must notify the Legislature in writing and as soon as practicable of the condition and approximate date or dates that it occurred, and to post the notice on the department's Internet Website.
33. Authorizes DHCS to conduct appropriate close-out activities, if any of the conditions in 31) above are satisfied, as specified. Requires DHCS to notify specified entities, including the Legislature of the determination and this bill is repealed as of the effective date of the notification issued by the Director.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. One-time costs of $1.2 million and ongoing administrative costs of $750,000 annually (Medi-Cal Emergency Medical Transport Fund/federal) for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the fee, and make increased payments. This bill provides that $1.003 million in the first year and $374,000 per year thereafter must be available to DHCS for administrative costs (the state would be able to draw down additional federal funding to help cover the administrative costs).
2. Based on data provided by EMT providers, staff assumes costs associated with fee collection and payment as follows:
   1. Ongoing General Fund (GF) benefit of about $3.2 million per year through reduced GF health care spending. This bill provides that 10% of revenue collected (after setting aside administrative funding) is available to the state for health care coverage. Thus, this bill reduces the need for GF support of the Medi-Cal program by an equal amount.
   2. Additional payments of about $74 million per year for Medi-Cal EMT services (Medi-Cal Emergency Medical Transport Fund/ federal). The quality assurance fee is projected to generate nearly $30 million per year in revenues (after accounting for administration and a 10% set-aside for state health care coverage). With federal matching funds, about $73 million per year would be paid in increased reimbursements to providers.

COMMENTS: According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal EMT rates, without imposing a cost to the state GF. In addition, $3 million of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot "opt out" or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix.

While the costs to provide essential ambulance services have significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would significantly increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs.

The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for EMTs in nearly 20 years, and in those intervening years since the last increase, they have twice seen their Medi-Cal rates decreased. In those intervening years, employee wages continued to grow, fuel prices have skyrocketed, health care costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill would address nearly two decades of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing EMT.

The Guardian Ambulance Service and the Antelope Ambulance Service, both local ambulance providers, oppose this bill and indicate that this bill taxes non-emergency ambulance providers to subsidize the income of Medi-Cal emergency transports for the 9-1-1- providers.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 FN: 0001764

Date of Hearing: August 30, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 523

Author:(Hernandez) – As Amended Ver:August 22, 2017

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

SUMMARY:

This bill establishes a quality assurance fee (QAF) on providers of emergency medical transportation (EMT, or ambulance) beginning on July 1, 2018, and uses the revenue to increase reimbursement to ambulance providers through an add-on payment that supplements the existing Medi-Cal fee-for-service payment schedule. Specifically, this bill:

1. Assesses a fee on EMT providers of 5.1% for the first year, and a similar level in future years, of projected total annual gross receipts for all emergency medical transport providers, for purposes of raising revenue to increase EMT reimbursement rates.
2. Contains numerous details about fee payment, recourse for nonpayment, federal approval, administrative flexibility, and conditions required for implementation.
3. Allocates revenues to a newly created Medi-Cal Emergency Medical Transport Fund and continually appropriates funds for designated purposes.
4. Specifies QAF revenues collected, as well as associated federal reimbursement, are to be used to supplement and not supplant existing EMT funding.
5. Specifies revenue must be used for the following, in priority order:
6. $1 million for 2018-19, and $374,000 in subsequent fiscal years, for Department of Health Care Services (DHCS) staffing and administrative costs associated with implementation (such revenue can be matched with federal funds).
7. To pay for health care coverage in each fiscal year, 10 percent of the projected QAF revenue for that fiscal year.
8. To make increased payments to EMT providers. Specifically, it requires the fee-for-service payment schedule governing reimbursement to EMT providers be increased by an amount calculated as specified.
9. Contains numerous fiscal safeguards, both for the state GF and for EMT providers subject to the fee, including making implementation contingent on federal approval and federal financial participation (FFP), as well as administrative authority to cease implementation if the director of DHCS finds the program is no longer beneficial to the GF.
10. Ceases implementation based on any one of numerous circumstances or findings, including a situation in which the state does not meet a maintenance-of-effort with respect to EMT payment levels, as well as a situation where a change in federal law or policy is likely to result in a decrease in FFP.
11. Allows DHCS to implement this bill via non-regulatory guidance, with notification to the Legislature and to stakeholders, and requires guidance to be made accessible.
12. Includes an urgency clause, in order to implement the QAF as soon as federal approval is obtained.

FISCAL EFFECT:

1. One-time costs of $1.2 million and ongoing administrative costs of $750,000 annually (Medi-Cal Emergency Medical Transport Fund/federal) for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the fee, and make increased payments. This bill provides that $1.003 million in the first year and $374,000 per year thereafter must be available to DHCS for administrative costs (the state would be able to draw down additional federal funding to help cover the administrative costs).
2. Based on data provided by EMT providers, staff assumes costs associated with fee collection and payment as follows:
   1. Ongoing GF benefit of about $3.2 million per year through reduced GF health care spending. This bill provides that 10% of revenue collected (after setting aside administrative funding) is available to the state for health care coverage. Thus, this bill reduces the need for GF support of the Medi-Cal program by an equal amount.
   2. Additional payments of about $74 million per year for Medi-Cal EMT services (Medi-Cal Emergency Medical Transport Fund/ federal). The quality assurance fee is projected to generate nearly $30 million per year in revenues (after accounting for administration and a 10% set-aside for state health care coverage). With federal matching funds, about $73 million per year would be paid in increased reimbursements to providers.

COMMENTS:

1. Purpose. According to the author, this bill increases Medi-Cal EMT rates by levying a fee on three specific EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state GF. In addition, 10% of revenue raised by the QAF would offset GF costs for state-funded health care coverage. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a longstanding issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot “opt out” or otherwise limit their participation in the Medi-Cal program based on low Medi-Cal reimbursement levels.
2. Background. Federal law authorizes states to fund a portion of Medicaid (Medi-Cal in California) through provider fees that meet federal requirements. The fee revenue collected by states is matched through federal financial participation (FFP) and used to increase provider payments, either through supplemental payments or through increased rates. With certain exceptions, state QAF must be broad-based, uniform, and cannot hold a group of providers harmless with respect to fees paid and payments received. In California, QAF mechanisms have been used to fund Medi-Cal managed care, skilled nursing facilities (SNF, nursing homes), intermediate care facilities for the developmentally disabled (ICF-DDs), and hospitals.
3. EMT Rates Subject to 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 some providers. It took effect for ambulance providers in September 2013, but without retroactive recoupment.
4. EMT Costs Versus Medi-Cal Payments. Ambulance payment rates in Medi-Cal are poor even compared to Medi-Cal's generally low fee-for-service payment rates, which are generally about 50% of Medicare levels across all types of services. A 2012 U.S Government Accountability Office (GAO) study found the median cost per ambulance transport was $429 nationally, whereas the current average Medi-Cal payment, including the AB 97 reductions discussed above, is $106 before minor add-ons that slightly increase reimbursement. The add-on payment, made possible pursuant to this bill, will more than double base EMT rates to an estimated $282.
5. Prior Legislation.
   1. SB 1300 (Hernández) was very similar to this bill, but lacked some of this bill's fiscal protections. SB 1300 was vetoed by the Governor, who noted GF risk and urged the Legislature and ambulance providers to work with DHCS and the Department of Finance to restructure the fee in a way that protects the GF and allows for an increase in reimbursement for EMT services. This bill is the outcome of such discussions and thus appears to address the veto message.
   2. AB 2577 (Cooley and Pan), of the 2013-14 Legislative Session, authorized governmental entities to make intergovernmental transfers as the non-federal share of expenditures for ground EMT services for purposes of drawing down federal Medicaid matching funds. AB 2577 was vetoed by the Governor, who cited administrative capacity issues and committed to continue work on a funding mechanism.
   3. SB 1374 (Hernandez) of 2013 and AB 1257 (Gray) of 2015 increased payment rates for ground EMT services. Both were held on the suspense files of their respective house's Appropriations Committees.
   4. AB 678 (Pan), Chapter 397, Statutes of 2011, establishes a supplemental payment program for governmental entity providers of Medi-Cal EMT services, based on certified public expenditures using state or local governmental entities’ funds as the required federal match.
6. Support and Opposition. Many EMT providers and the California Ambulance Association support this bill as a mechanism to increase low Medi-Cal reimbursement rates. California Hospital Association also supports this bill. Three ambulance providers write in opposition, objecting to the fee and reimbursement mechanism, which they indicate will benefit their competitors.

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

Date of Hearing: July 11, 2017

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

SBPCA Bill Id:SB 523

Author:(Hernandez) – As Amended Ver:April 24, 2017

SENATE VOTE: 38-1

SUBJECT: Medi-Cal: emergency medical transport providers: quality assurance fee.

SUMMARY: Imposes a quality assurance fee (QAF) for each emergency medical transport (EMT) provided by an emergency medical transport provider (EMTP), pursuant to a prescribed methodology. Specifically, this bill:

1. Imposes a QAF for each EMT provided by each EMTP commencing with the state fiscal year (SFY) beginning on July 1, 2018, and continuing each state fiscal quarter.
2. Requires each EMTP to report quarterly to the Department of Health Care Services (DHCS), the data on the number of actual EMTs by payer type, including without limitation, Medi-Cal fee-for-service (FFS) EMTs and Medi-Cal managed care EMTs, as follows:
   1. For each quarter beginning on July 1, 2015, through the quarter beginning on July 1, 2017, inclusive, the data is required to be submitted on or before October 15, 2017; and,
   2. For the quarter beginning on October 1, 2017 and continuing each quarter thereafter, the data is required to be submitted on or before the 45^th day after the last day of the applicable quarter.
3. Requires each EMTP to report to DHCS, the data on the gross receipts received from the provision of EMTs per SFY, as follows:
   1. For SFYs beginning on July 1, 2015, and July 1, 2016, the data is required to be submitted on or before October 15, 2017; and,
   2. For each SFY beginning on July 1, 2017 and continuing each fiscal year thereafter, the data is required to be submitted on or before the 45^th day after the last day of the applicable state fiscal year.
4. Requires the Director of DHCS (Director), on or before June 15, 2018, and continuing each June 15 thereafter, to calculate the annual QAF rate applicable to the following SFY based on the most recently collected data from EMTPs.
   1. For the SFY beginning on July 1, 2018, the annual QAF rate is to be calculated by multiplying the projected total annual gross receipts for all EMTPs subject to the fee by 5.1%, then the resulting product is to be divided by the projected total annual EMTs by all EMTPs subject to the QAF for the SFY; and,
   2. For SFY beginning July 1, 2019, and continuing each SFY thereafter, the annual QAF is be calculated by a ratio, as specified.
5. Requires the Director on or before June 15, 2018, and continuing each June 15 thereafter, to publish the annual QAF rate on its Internet Website.
6. Prohibits the fees collected under this bill from exceeding the amounts allowed under federal law, as specified. Authorizes the Director of DHCS to: a) reduce the increased FFS payment schedule, as specified, to comply with the amount allowable under federal law; or, b) adjust the annual QAF rate if the fee amount exceeds or is less than the actual or projected aggregate schedule amount, as specified.
7. Requires each EMTP to remit to DHCS an amount equal to the annual QAF rate for the 2018-19 SFY multiplied by the number of EMTs reported or should have been reported pursuant to 2) above, based on a schedule established by the Director of DHCS.
8. Establishes a remittance due date for the first year based on the size of the EMTP.
9. Requires each EMTP to remit to DHCS the QAF each SFY quarter beginning on October 1, 2018, as specified. Requires interest to be assessed on the QAF not paid on the date the QAF is due at the greater of 10% per annum or the rate at which DHCS assesses interest on Medi-Cal program overpayments, as specified, and to be deposited in the Medi-Cal Emergency Medical Transport Fund (Fund).
10. Authorizes DHCS to deduct the unpaid fee and interest owed from any Medi-Cal reimbursement payments owed to the EMTP if any fee payment is more than 60 days overdue, as specified, and upon written notification to the EMTP and taking into account the financial condition of the EMTP.
11. Authorizes a penalty for any fee payment that is more than 60 days overdue equal to the amount in 9) above.
12. Requires DHCS to do the following:
    1. Establish the manner and format for EMTPs to report the data specified by this bill;
    2. Accept an EMTP’s payment even if the payment is submitted in a rate year subsequent to the rate year in which the QAF was assessed; and,
    3. Deposit the QAF in the Fund, created under this bill and is to be continuously appropriated.
13. Establishes the Fund to support quality improvement efforts of EMTPs, to pay for the state’s administrative costs, and to provide funding for health care coverage for Californians, in the following order of priority:
    1. To pay DHCS staffing and administrative costs directly attributable to implementing this bill, not to exceed the following amounts:
       1. For the 2018-19 SFY: $1,0003,000, exclusive of any federal matching funds;
       2. For the 2019-20 SFY and each SFY thereafter: $374,000.
    2. To pay for the health care coverage in each SFY in the amount of $3 million, exclusive of any federal matching funds; and,
    3. To make increased payment to EMTPs under this bill.
14. Authorizes DHCS to establish an Internet Website for the submission of the reports, and to require a certification by each EMTP of the truth of the reports submitted. Authorizes DHCS to impose a penalty of $100 per day against an EMTP every day for failure to make the required report within five days of the date upon which the report was due.
15. Requires the Medi-Cal FFS payment schedule governing reimbursement to EMTPs for EMTs to be increased. Requires the calculation of the increase on or before June 15, 2015, and to remain the same for later SFYs. Requires the increase to only apply to the following billing codes: A0429 BLS Emergency, A0427 ALS Emergency, and A0433 ALS2, as defined.
16. Requires DHCS to calculate the projections for the payment schedule to be based on data submitted under 2) and 3) above, and specifies that the resulting FFS payment schedule amounts to be equal to a specific amount.
17. Requires each Medi-Cal managed care health plan to satisfy its obligation for EMTs by providing payment to EMTPs, as specified.
18. Requires the increased payments to be funded solely from the following:
    1. The QAF under this bill, along with any interest or other investment income; and,
    2. Federal reimbursement and any other related federal funds.
19. Requires the proceeds of the QAF, the matching amount provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for EMTPs and not to supplant this funding.
20. Provides that if there is a delay in the implementation of the provisions of this bill, the following applies:
    1. Permits an EMTP subject to the QAF to not pay the fee until the FFS payment schedule increases in this bill are approved. Requires the Director to establish a schedule for payment of retroactive fees in consultation with EMTPs to minimize the disruption to the cash flow of EMTPs; and,
    2. Permits the Director to retroactively increase and make payment of supplemental rates to EMTPs.
21. Permits the Director to adopt regulations as are necessary to implement this bill, including emergency regulations. Requires the regulations to include, but need not be limited to, any regulations necessary for the administration of this bill, including proper imposition of the QAF and process for its collection, reporting and refunds, DHCS administration of the provisions of this bill, the development of any forms necessary to obtain required information from EMTPs subject to the QAF, and the provision of details, definitions, formulas, and other requirements.
22. Permits DHCS to implement the provisions of this bill, in whole or in part, by means of a provider bulletin, or other similar instructions, without taking regulatory action, provided that no such bulletin or other similar instructions remain in effect after June 30, 2018.
23. Requires DHCS to request approval from the Centers for Medicare and Medicaid Services (CMS) on the use of QAFs for the purpose of receiving federal matching funds.
24. Permits the Director to alter the methodology in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires the Director, if after consulting with affected EMTPs determines that an alteration is needed, to execute a declaration stating that this determination has been made, to provide a copy, within five working days of the execution of the declaration, to the appropriate legislative fiscal and policy committees.
25. Permits the Director to add categories of exempt EMTPs or apply a non-uniform fee per EMT to EMTPs that are subject to the QAF in order to meet requirements of federal law or regulations. Permits the Director to exempt categories of EMTPs from the QAF if necessary to obtain federal approval.
26. Requires implementation of this bill under the following conditions:
    1. CMS does not determine that the QAF revenues may not be used for purposes set forth in this bill;
    2. The state receives federal approval for the increased FFS payment schedule increases; and,
    3. The state continues its maintenance of effort for the level of state funding of EMTs reimbursement for the 2018-19 rate year, and for every subsequent rate year, in an amount not less than the amount that the state would have paid for the same number of EMTs under the rate methodology that was in effect on July 31, 2016.
27. Ceases implementation of this bill under one of the following conditions:
    1. CMS no longer allows the use of EMTP assessment as set forth in this bill;
    2. The Medi-Cal FFS payment schedule increase no longer remains in effect;
    3. A final judicial determination is made by the California Supreme Court or any California Court of Appeal that the revenues collected pursuant to this bill that are deposited in the Fund are either “General Fund proceeds of taxes appropriated pursuant to Article XIII B,” or “allocated local proceeds of taxes,” as used in the California Constitution for purposes of Proposition 98 of 1988, the school funding guarantee; or,
    4. The state does not continue its maintenance of effort for the level of state funding of EMTs reimbursement for the 2018-19 rate year, or for any subsequent rate year, in an amount not less than the amount that the state would have paid for the same number of EMTs under the rate methodology in effect on July 31, 2016.
28. Requires, if all of the conditions in 26) above are met, this bill to be implemented. Requires, if any one of the conditions in 27) above is met, this bill to become inoperative on the date that is six months after the date when any one of the conditions in 27) above is met.
29. Makes this bill inoperative in the event of a final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the CMS Administrator, that FFP is not available with respect to any payment made under the methodology implemented pursuant to this bill because the methodology is invalid, unlawful, or contrary to any provision of federal law or regulations or of state law. Makes this provision inoperative on the date that is six months after the date of the final judicial determination that is not appealed, the date of the final judicial determination by a court of appellate jurisdiction that is not further appealed, or on the date of the final determination of CMS.

EXISTING LAW:

1. Establishes the Medi-Cal program, administered by DHCS which provides health benefits to low-income individuals who meet specific eligibility criteria.
   
2. Includes EMT and nonemergency medical transport (NEMT) in the Medi-Cal schedule of benefits.
   
3. Reduces specified Medi-Cal provider rates, including ground ambulance services effective June 1, 2011, by 10% for dates of service on and after June 1, 2011, subject to specific requirements. Applies the 10% reduction for ambulance providers for dates of service on or after September 5, 2013, but was not applied retroactively back to June 2011.
   

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Ongoing administrative costs, likely in the hundreds of thousands to low millions per year, for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the QAF, and make supplemental payments (special fund, General Fund [GF], and federal funds). This bill provides that $1 million is to be available to DHCS in 2018-19 and $375,000 per year thereafter for administrative costs. To the extent that actual administrative costs are higher, those costs would be paid from the GF and federal funds.
2. Ongoing GF benefit of $3 million per year. This bill provides that $3 million per year in revenue collected (after setting aside administrative funding) is to be available to the state for support of the Medi-Cal program. In doing so, this bill would reduce the need for GF support of the Medi-Cal program by an equal amount.
3. Additional payments of about $75 million per year for EMT in the Medi-Cal program (special fund and federal funds). The QAF is projected to generate about $30 million per year in revenues (after accounting for administration and state benefits). Coupled with federal matching funds, there would be about $75 million per year for increased reimbursements to providers.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal EMT rates, without imposing a cost to the state GF. In addition, $3 million of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot “opt out” or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix.
   
   While the costs to provide essential ambulance services has significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would significantly increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs.
   
2. BACKGROUND.
   
   1. Provider Taxes. Federal Medicaid law authorizes states to impose healthcare-related provider taxes on certain types of health care services (such as inpatient hospital services, nursing facility services, emergency ambulance services, and managed care organizations) without affecting federal matching funding. Healthcare-related taxes are defined as licensing fees, assessments, or other mandatory payments that are related to the provision of, or payment for, health care services or items. In many states, including California, states collect these payments from health care providers to help finance the nonfederal share of their Medicaid expenditures. To be deemed permissible under federal law, health-care related taxes must be:
      
      1. Broad based: imposed on all providers within a specified class of providers;
      2. Uniform: applied at the same rate for all payers of the tax; and,
      3. No hold harmless: the state may not provide a direct or indirect guarantee that providers receive their tax payment back, or be “held harmless” from the tax.

Federal rules permit some healthcare-related taxes that do not meet the definition of being “broad-based” and “uniform.” To obtain permission for such a tax, states must formally request a waiver of the broad-based and uniform requirements from CMS, and within the waiver request, demonstrate that the tax structure is generally redistributive. However, federal law does not allow for any waiver of the no-hold-harmless requirement.

California currently has provider fees on managed care plans, hospitals, skilled nursing facilities and intermediate care facilities for the developmentally disabled.

• 1. Medi-Cal rates for ambulance services. Medi-Cal covers both EMT and NEMT. EMT is provided when necessary to obtain program covered benefits when the beneficiary’s medical/physical condition is acute and severe, necessitating immediate medical diagnosis and treatment in order to prevent death or disability. Such transportation does not require prior authorization and is always by ambulance.
     
     When billing Medi-Cal for a “911 call,” ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services. Medi-Cal FFS emergency base ambulance rates were increased in 1997, 1998, and last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%). The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999.
     
  2. Calculation of QAF amount owed. This bill establishes how the QAF will be collected in the initial year (beginning July 1, 2018) and then on an on-going basis (2019-20 and thereafter).
     
     For the 2018-19 SFY, this bill would asses a QAF at a rate of 5.1% against the projected gross receipts of all EMTPs from three reimbursement codes, divided by the projected total EMTs for the three reimbursement codes by all EMTPs. Initial payments of the QAF would be made by a provider that rendered 35,000 or more EMTs by July 1, 2018 in order to ensure sufficient funding is provided for the increased rate (in effect, a front-loaded QAF payment from American Medical Response). Other EMTPs must pay 50% or less of the QAF payment described in this paragraph on or after August 1, 2018.
     
     For SFYs beginning 2019-20 and thereafter, the QAF amount owed would be calculated differently than the initial 2018-19 SFY. The state would determine the total funds amount needed from the QAF to fund the increased Medi-Cal rates projected for the three billing codes based on estimated number of Medi-Cal EMTs (after taking into account the federal Medicaid matching percentage), DHCS administrative costs and the $3 million GF offset. The projected total funds amount needed from the QAF would be divided by total projected EMTs for the three billing codes to establish the per transport fee.
     
  3. Calculation of the Medi-Cal rate increase amounts from QAF. This bill establishes the formula for how the resulting QAF revenue will be used to fund state administrative costs related to this bill, $3 million for health coverage of Californians (in effect, a GF offset), and Medi-Cal rate increases for three EMT codes. The state would take the total projected fee revenue from the QAF for 2018-19, minus the amount for DHCS administration costs and the $3 million that goes to health coverage, and then adding the resulting federal financial matching funds to the remaining state funds. The resulting amount would then be divided by the projected number of EMTs to determine the per EMT Medi-Cal rate increase for the three reimbursement codes. This amount would then be added to the existing 2015-16 base rates to determine the new Medi-Cal rate.
     

1. SUPPORT. According to the 911 Ambulance Provider’s Medi-Cal Alliance (911 Alliance), the sponsor of this bill, in 2015, the leadership of six of California's largest private ambulance companies came together to discuss Medi-Cal reimbursement rates for emergency ambulance transports and formed the 911 Alliance with a mission to work together to help resolve the ongoing issue of low Medi-Cal reimbursement rates.
   
   The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for EMTs in nearly 20 years, and in those intervening years since the last increase, they have twice seen their Medi-Cal rates decreased. In those intervening years, employee wages continued to grow, fuel prices have skyrocketed, health care costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill would address nearly two decades of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing EMT.
   
2. PREVIOUS LEGISLATION.
   1. SB 1300 (Hernandez) of 2016 would have imposed a QAF on each EMT provided by an EMTP in accordance with a prescribed methodology. Would have required the resulting revenue to be placed in a continuously appropriated fund to be used to provide additional Medi-Cal reimbursement to EMTPs, to pay for state administrative costs, and to provide funding for health care coverage for Californians. SB 1300 was vetoed by Governor Brown, who stated he supported “establishing a quality assurance fee to bring in additional federal funding to support emergency transportation services. However, the structure of the rate increase in this bill is unlike any other fee structure supported by health care related quality assurance fees. I am concerned this structure puts the state general fund at risk for paying the increased rate if the revenue falls short or if the fee is reduced or removed in the future. I urge the Legislature and ambulance providers to work with the Departments of Health Care Services and Finance to restructure this fee in a way that protects the general fund and allows for an increase in reimbursement for emergency transportation services.”
   2. AB 511 (De La Torre) of 2010, among other provisions, would have imposed, as a condition of participation in the Medi-Cal Program, a QAF on certain ambulance transportation services providers, to be administered by DHCS. AB 511 was held on the Senate Appropriations suspense file; subsequently referred to Senate Health and Revenue and Taxation Committees. At the request of the author, the bill was not heard in a policy committee again.

REGISTERED SUPPORT / OPPOSITION:

Support

911 Ambulance Provider’s Medi-Cal Alliance (sponsor)

Alameda County Board of Supervisors

American Medical Response

California Ambulance Association

California Hospital Association

Hall Ambulance Service Incorporated

Paramedics Plus

Opposition

None on file.

Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097

 THIRD READING  

Bill No: SB 523

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 7-1, 4/19/17

AYES: Hernandez, Atkins, Leyva, Mitchell, Monning, Nielsen, Roth

NOES: Nguyen

NO VOTE RECORDED: Newman

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Nielsen, Wiener

NO VOTE RECORDED: Bates

SUBJECT:

SOURCE: 911 Provider's Medi-Cal Alliance

DIGEST:

This bill imposes a quality assurance fee on each transport provided by an emergency medical transport provider in accordance with a prescribed methodology. This bill requires the resulting revenue to be placed in a continuously appropriated fund to be used to provide additional Medi-Cal reimbursement to emergency medical transport providers in fee-for-service and Medi-Cal managed care, to pay for state administrative costs, and to provide funding for health care coverage for Californians. This bill takes effect immediately as an urgency bill.

ANALYSIS:

Existing law:

1. Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), which provides health benefits to low-income individuals who meet specified eligibility criteria.
2. Establishes a schedule of benefits under the Medi-Cal program, which includes emergency and non-emergency medical transportation. Establishes, through regulation, maximum Medi-Cal reimbursement rates for medical transportation services, and prohibits the amount billed from exceeding charges made to the general public.
3. Reduces specified Medi-Cal provider rates (including ground ambulance services), effective June 1, 2011, by 10% for dates of services on and after June 1, 2011, subject to federal approval, federal financial participation (FFP), and the reduction meeting federal Medicaid requirements. The 10% reduction took effect for ambulance providers for dates of service on or after September 5, 2013, but was not applied retroactively back to June 2011.

This bill:

1. Imposes a quality assurance fee (QAF), commencing with the state fiscal quarter beginning on July 1, 2018, and continuing each state fiscal quarter thereafter, for each emergency medical transport (EMT) provided by each EMT provider subject to the QAF.
2. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15th thereafter, to calculate the annual QAF rate applicable to the following state fiscal year based on the most recently collected data collected from EMT providers.
3. Establishes a formula for calculating the QAF rate in the first year, and a separate formula for state fiscal years beginning July 1, 2019, and thereafter. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15 thereafter, to publish the annual QAF rate on its Internet Web site.
4. Prohibits the QAF calculated and collected from exceeding the amounts allowable under federal law. Permits the DHCS director, if on or before June 15 of each year, if he or she makes a determination that the QAF collected exceed the amounts allowable under federal law, to reduce the increased Medi-Cal fee-for-service (FFS) payment schedule increase in this bill only to the extent necessary to reduce the QAF calculated to comply with the amount allowable under federal law.
5. Requires the DHCS director, if during a state fiscal year, the actual or projected available QAF amount exceeds or is less than the actual or projected aggregate QAF schedule amount by more than 1%, to adjust the annual QAF rate so that the available QAF amount for the state fiscal year will approximately equal to the aggregate QAF schedule amount for the state fiscal year. (This permits DHCS to adjust the QAF rate amount paid by medical transport providers to account for the amount needed to pay for the increased Medi-Cal reimbursement rate.)
6. Requires the available QAF fee amount for a state fiscal year to be considered to equal the aggregate fee schedule amount for the state fiscal year if the difference between the available fee amount for the state fiscal year and the aggregate fee schedule amount for the state fiscal year constitutes less than 1% of the aggregate fee schedule amount for the state fiscal year.
7. Establishes a remittance due date for the first year based on the size of the EMT provider, on-going remittance due dates, interest penalties for late payments and deductions of unpaid fees and interest from Medi-Cal payments.
8. Requires DHCS to deposit the QAF collected in the continuously appropriated Medi-Cal Emergency Medical Transport Fund (Fund), which is created in the State Treasury by this bill. Requires the Fund to also include interest and dividends earned on moneys in the Fund.
9. Requires moneys in the Fund to be available exclusively to enhance FFP for ambulance services under the Medi-Cal program and to provide additional reimbursement to, and to support quality improvement efforts of, EMT providers, to pay for the state’s administrative costs and to provide funding for health care coverage for Californians, in the following order of priority:
   1. To pay for DHCS staffing and administrative costs directly attributable to implementing this bill, not to exceed for the 2018–19 state fiscal year, $1,003,000, exclusive of any federal matching funds, and for the 2019–20 state fiscal year and thereafter, $374,000, exclusive of any federal matching funds;
   2. To pay for the health care coverage in each state fiscal year in the amount of $3 million, exclusive of any federal matching funds; and,
   3. To make increased payments to EMT providers pursuant to this bill.
10. Requires, effective July 1, 2018, the Medi-Cal FFS payment schedule governing reimbursement to EMT providers for EMTs to be increased. Requires the increase to the Medi-Cal FFS payment schedule to be calculated on or before June 15, 2018, and to remain the same for later state fiscal years. Requires the increase to the FFS payment schedule to apply only to those billing codes identified in this bill, or any equivalent, predecessor, or successor billing codes, as determined by the DHCS director.
11. Requires DHCS to calculate the required projections based on the data submitted under this bill. Requires the resulting Medi-Cal FFS payment schedule amounts after the application of this bill to be equal to the sum of both of the following:
    1. The Medi-Cal FFS payment schedule amount for the state fiscal year 2015–16 and,
    2. The quotient of the available fee amount projected by DHCS on or before June 15, 2018, for the state fiscal year 2018–19, divided by the total FFS and managed care Medi-Cal EMTs plans, utilizing these billing codes projected by the DHCS on or before June 15, 2018, for the state fiscal year 2018–19.
12. Requires each Medi-Cal managed care health plan to satisfy its obligation under a specified provision of federal Medicaid regulations for EMTs by providing payment to EMT providers that is equal to the amount of payment described in federal law (known as the “Rodgers amendment”) that requires non-contracting emergency providers to accept as payment in full the amount of the FFS Medicaid rate.
13. Requires the increased payments authorized by this bill to be funded solely from the following:
    1. The QAF, along with any interest or other investment income thereon;
    2. Federal reimbursement and any other related federal funds; and,
    3. The proceeds of the QAF, the matching amount provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for EMTs provided by EMT providers and not to supplant this funding.
14. Requires, if there is a delay in the implementation of this bill for any reason, both of the following to apply:
    1. Permits an EMT provider subject to the fee to not pay the fee until the FFS payment schedule increases in this bill are approved. Requires the DHCS director to establish a schedule for payment of retroactive fees in consultation with EMT providers to minimize the disruption to the cash flow of emergency medical transport providers; and,
    2. Permits DHCS to retroactively increase and make payment of supplemental rates to EMT providers.
15. Permits the DHCS director to adopt regulations as are necessary to implement this bill, including emergency regulations. Requires the regulations to include, but need not be limited to, any regulations necessary for the administration of this bill, including the proper imposition of the QAF and process for its collection, reporting, and refunds, DHCS administration of this bill, the development of any forms necessary to obtain required information from EMT providers subject to the QAF, and the provision of details, definitions, formulas, and other requirements.
16. Permits DHCS to implement this bill, in whole or in part, by means of a provider bulletin, or other similar instructions, without taking regulatory action, provided that no such bulletin or other similar instructions remain in effect after June 30, 2018.
17. Permits the DHCS director to alter the methodology in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires the DHCS director, after consulting with affected EMT providers, determines that an alteration is needed, to execute a declaration stating that this determination has been made, to provide a copy, within five working days of the execution of the declaration, to the appropriate legislative fiscal and policy committees.
18. Permits the DHCS to add categories of exempt EMT providers or apply a non-uniform fee per transport to EMT providers that are subject to the QAF in order to meet requirements of federal law or regulations. Permits the DHCS director to exempt categories of EMT providers from the fee if necessary to obtain federal approval.
19. Requires this bill to be implemented and to cease to be implemented if specified conditions are met.
20. Makes this bill inoperative in the event of a final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the CMS administrator, that FFP is not available with respect to any payment made under the methodology implemented pursuant to this bill because the methodology is invalid, unlawful, or contrary to any provision of federal law or regulations or of state law. This inoperative provision would take effect on the date that is six months after the date of the final judicial determination that is not appealed, the date of the final judicial determination by a court of appellate jurisdiction that is not further appealed, or on the date of the final determination of CMS.

Comments

1. Author’s statement. According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state General Fund (GF). In addition, $3 million of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot “opt out” or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix.

While the costs to provide essential ambulance services has significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would significantly increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs.

1. Medi-Cal rates for ambulance services. Medi-Cal covers emergency medical transportation when necessary to obtain Medi-Cal covered benefits when a beneficiary’s medical or physical condition is acute and severe, necessitating immediate diagnosis and treatment so as to prevent death or disability. When billing Medi-Cal for a “911 call,” ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services. Medi-Cal FFS emergency base ambulance rates were increased in 1997 and 1998 and were last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%) pursuant to AB 97 (Committee on Budget, Chapter 3, Statutes of 2011). The ambulance rate reduction was not imposed retroactively but did apply prospectively, beginning on September 5, 2013. The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local: Yes

According to the Senate Appropriations Committee:

• Ongoing administrative costs, likely in the hundreds of thousands to low millions per year, for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the QAF, and make supplemental payments (special fund, GF, and federal funds). The bill provides that $1 million shall be available to DHCS in 2018-19 and $375,000 per year thereafter for administrative costs. To the extent that actual administrative costs are higher, those costs would be paid from the GF and federal funds.
• Ongoing GF benefit of $3 million per year. This bill provides that $3 million per year in revenue collected (after setting aside administrative funding) shall be available to the state for support of the Medi-Cal program. In doing so, this bill reduces the need for GF support of the Medi-Cal program by an equal amount.
• Additional payments of about $75 million per year for emergency medical transportation in the Medi-Cal program (special fund and federal funds). The QAF is projected to generate about $30 million per year in revenues (after accounting for administration and state benefits). Coupled with federal matching funds, there would be about $75 million per year for increased reimbursements to providers.

SUPPORT: (Verified 5/23/17)

911 Provider's Medi-Cal Alliance (source)

American Medical Response

California Ambulance Association

Hall Ambulance Service Incorporated

McCormick Ambulance

Paramedics Plus

OPPOSITION: (Verified 5/23/17)

None received

ARGUMENTS IN SUPPORT: This bill is sponsored by the 911 Provider's Medi-Cal Alliance (911 Alliance), which writes that in 2015, the leadership of six of California's largest private ambulance companies came together to discuss Medi-Cal reimbursement rates for emergency ambulance transports and formed the 911 Ambulance Provider's Medi-Cal Alliance with a mission to work together to help resolve the ongoing issue of low Medi-Cal reimbursement rates.

The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for emergency transports in nearly 20 years, and in those intervening years since the last increase, they have twice seen their Medi-Cal rates decreased. In those intervening years, employee wages continue to grow, fuel prices have skyrocketed, health care costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill addresses nearly two decades of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing emergency medical transportation.

Prepared by:

5/27/17 18:17:16

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 523 (Hernandez) - Medi-Cal: emergency medical transport providers: quality assurance fee

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

Bill Summary:

SB 523 would impose a quality assurance fee on emergency medical transportation. The bill would use the resulting revenue and federal matching funds to increase reimbursement rates paid in the Medi-Cal program for emergency medical transportation.

Fiscal Impact:

• Ongoing administrative costs, likely in the hundreds of thousands to low millions per year, for the Department of Health Care Services to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the quality assurance fee, and make supplemental payments (special fund, General Fund, and federal funds). The bill provides that $1 million shall be available to the Department in 2018-19 and $375,000 per year thereafter for administrative costs. To the extent that actual administrative costs are higher, those costs would be paid from the General Fund and federal funds.
• Ongoing General Fund benefit of $3 million per year. The bill provides that $3 million per year in revenue collected (after setting aside administrative funding) shall be available to the state for support of the Medi-Cal program. In doing so, the bill would reduce the need for General Fund support of the Medi-Cal program by an equal amount.
• Additional payments of about $75 million per year for emergency medical transportation in the Medi-Cal program (special fund and federal funds). The quality assurance fee is projected to generate about $30 million per year in revenues (after accounting for administration and state benefits). Coupled with federal matching funds, there would be about $75 million per year for increased reimbursements to providers.

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% of the federal poverty level and to children with household incomes up to 266% of the federal poverty level. The federal government provides matching funds that vary from 50% to 90% of expenditures depending on the category of beneficiary.

The reimbursement 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 are not 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.

Federal law allows states to impose quality assurance fees on providers in state Medicaid programs. States are allowed to impose such fees or taxes on providers, use the resulting revenues to draw down additional federal Medicaid funding, and use the combined revenues to pay increased reimbursement rates to providers. The state currently imposes quality assurance fees on hospitals, managed care plans, skilled nursing facilities, and intermediate care facilities for the developmentally disabled.

Proposed Law:

SB 523 would impose a quality assurance fee on emergency medical transportation. The bill would use the resulting revenue and federal matching funds to increase reimbursement rates paid in the Medi-Cal program for emergency medical transportation.

Specific provisions of the bill would:

• Impose a quality assurance fee for each emergency medical transport, beginning on July 1, 2018 (the quality assurance fee would not apply to all emergency medical transportation, not just those provided to Medi-Cal beneficiaries);
• Require the Department of Health Care Services to calculate the quality assurance fee rate each year;
• Establish the methods for calculating the quality assurance fee (which differ between the first year and subsequent years);
• Require the Medi-Cal fee-for-service reimbursement rate to be increased using the revenue generated and require Medi-Cal managed care plans to pay emergency medical transportation providers based on the increased fee-for-service reimbursement rate;
• Require the quality assurance fee revenues to be deposited in a new special fund and continuously appropriate the moneys in that fund for the purposes of the bill;
• Allocate the revenues generated under the bill: first to pay for administrative costs of $1 million in 2018-19 and $375,000 per year thereafter, second to allocate $3 million per year to pay for the state’s costs of operating the Medi-Cal program, and third to make increased provider payments;
• Require revenue generated from the quality assurance fee and federal matching funds to be used to supplement existing funding;
• Provide for the Department to adjust the fee rate;
• Require emergency medical transport providers to report specified data to the Department;
• Require emergency medical transport providers to remit the quality assurance fee to the Department;
• Require the Department to seek federal approval and to modify the methodology in the bill if necessary to meet federal requirements;
• Make implementation of the bill contingent on federal approval;
• Make the bill’s provisions inoperative if a court finds that the revenues generated under the bill are proceeds of taxes, pursuant to Article XIII B of the state constitution or if the state does not maintain the same level of funding for emergency medical transport reimbursements in the amount the state would have paid under the methodology in effect on July 1, 2016.

This bill is an urgency measure.

Related Legislation:

SB 1300 (Hernandez, 2016) was substantially similar to this bill. That bill was vetoed by Governor Brown, who stated that he was supportive of the concept of the bill but was concerned about future state financial risk if fee revenues fell short or the fee was eliminated in the future.

Staff Comments:

Currently, the state pays on average $150 for ground emergency medical transports in the fee-for-service system. (This average includes the base rate of $106 and a variety 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. According to calculations performed by the sponsors of the bill, the quality assurance fee is projected to be about $28 per emergency medical transport (this cost would be assessed on all emergency medical transports, not just those provided under the Medi-Cal program). The quality assurance fee is projected to result in the base emergency medical transport reimbursement rate increasing to about $340.

The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 523

SUBJECT: Medi-Cal: emergency medical transport providers: quality assurance fee

SUMMARY:

Imposes a quality assurance fee on each transport provided by an emergency medical transport provider in accordance with a prescribed methodology. Requires the resulting revenue to be placed in a continuously appropriated fund to be used to provide additional Medi-Cal reimbursement to emergency medical transport providers in fee-for-service and Medi-Cal managed care, to pay for state administrative costs, and to provide funding for health care coverage for Californians. Would take effect immediately as an urgency bill.

Existing law:

1. Establishes the Medi-Cal program, administered by the Department of Health Care Services

(DHCS), which provides health benefits to low-income individuals who meet specified eligibility criteria.

1. Establishes a schedule of benefits under the Medi-Cal program, which includes emergency and non-emergency medical transportation. Establishes, through regulation, maximum Medi-Cal reimbursement rates for medical transportation services, and prohibits the amount billed from exceeding charges made to the general public.
   
2. Reduces specified Medi-Cal provider rates (including ground ambulance services), effective June 1, 2011, by 10% for dates of services on and after June 1, 2011, subject to federal approval, federal financial participation (FFP), and the reduction meeting federal Medicaid requirements. If the director of DHCS determines that the payments do not comply with federal Medicaid requirements or that FFP is not available with respect to any payment that is reduced, the director retains the discretion to not implement the particular payment reduction and to adjust the payment as necessary to comply with federal Medicaid requirements. The 10% reduction took effect for ambulance providers for dates of service on or after September 5, 2013 but was not applied retroactively back to June 2011.

This bill:

1. Imposes a quality assurance fee (QAF), commencing with the state fiscal quarter beginning on July 1, 2018, and continuing each state fiscal quarter thereafter, for each emergency medical transport provided by each emergency medical transport provider subject to the QAF. Defines an “emergency medical transport provider” as any provider of emergency medical transports.
   
2. Defines an “emergency medical transport” as the act of transporting an individual from any point of origin to the nearest medical facility capable of meeting the emergency medical needs of the patient by an ambulance licensed, operated, and equipped in accordance with applicable state or local statutes, ordinances, or regulations that are billed with 3 billing codes (basic life support, advanced life support 1 and advanced life support 2), and any equivalent, predecessor, or successor billing codes as may be determined by the DHCS director. Excludes from the definition of “emergency medical transport” transportation of beneficiaries by passenger car, taxicabs, litter vans, wheelchair vans, or other forms of public or private conveyances, and transportation by an air ambulance provider. States an “emergency medical transport” does not occur when, following evaluation of a patient, a transport is not provided.
   
3. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15th thereafter, to calculate the annual QAF rate applicable to the following state fiscal year based on the most recently collected data collected from emergency medical transport providers.
   
4. Establishes a formula for calculating the QAF rate in the first year, and a separate formula for state fiscal years beginning July 1, 2019 and thereafter. Requires the DHCS director, on or before June 15, 2018, and continuing each June 15th thereafter, to publish the annual QAF rate on its Internet Web site.
   
5. Prohibits the QAF calculated and collected from exceeding the amounts allowable under federal law. Permits the DHCS director, if on or before June 15th of each year, if he or she makes a determination that the QAF collected exceed the amounts allowable under federal law, to reduce the increased Medi-Cal fee-for-service payment schedule increase in this bill only to the extent necessary to reduce the QAF calculated to comply with the amount allowable under federal law.
   
6. Requires the DHCS director, if during a state fiscal year, the actual or projected available QAF amount exceeds or is less than the actual or projected aggregate QAF schedule amount by more than 1%, to adjust the annual QAF rate so that the available QAF amount for the state fiscal year will approximately equal to the aggregate QAF schedule amount for the state fiscal year. (This permits DHCS to adjust the QAF rate amount paid by medical transport providers to account for the amount needed to pay for the increased Medi-Cal reimbursement rate.)
   
7. Requires the available QAF fee amount for a state fiscal year to be considered to equal the aggregate fee schedule amount for the state fiscal year if the difference between the available fee amount for the state fiscal year and the aggregate fee schedule amount for the state fiscal year constitutes less than 1% of the aggregate fee schedule amount for the state fiscal year.
   
8. Establishes a remittance due date for the first year based on the size of the emergency medical transport provider, on-going remittance due dates, interest penalties for late payments and deductions of unpaid fees and interest from Medi-Cal payments.
   
9. Requires DHCS to deposit the QAF collected in the continuously appropriated Medi-Cal Emergency Medical Transport Fund (Fund), which is created in the State Treasury by this bill. Requires the Fund to also include interest and dividends earned on moneys in the Fund.
10. Requires moneys in the Fund to be available exclusively to enhance FFP for ambulance services under the Medi-Cal program and to provide additional reimbursement to, and to support quality improvement efforts of, emergency medical transport providers, to pay for the state’s administrative costs and to provide funding for health care coverage for Californians, in the following order of priority:
    
11. To pay for DHCS staffing and administrative costs directly attributable to implementing this bill, not to exceed for the 2018–19 state fiscal year, $1,003,000, exclusive of any federal matching funds, and for the 2019–20 state fiscal year and thereafter, $374,000, exclusive of any federal matching funds;
12. To pay for the health care coverage in each state fiscal year in the amount of $3 million, exclusive of any federal matching funds; and,
13. To make increased payments to emergency medical transport providers pursuant to this bill.
    
14. Requires, effective July 1, 2018, the Medi-Cal fee-for-service payment schedule governing reimbursement to emergency medical transport providers for emergency medical transports to be increased. Requires the increase to the Medi-Cal fee-for-service (FFS) payment schedule to be calculated on or before June 15, 2018, and to remain the same for later state fiscal years. Requires the increase to the FFS payment schedule to apply only to those billing codes identified in this bill, or any equivalent, predecessor, or successor billing codes, as determined by the DHCS director.
    
15. Requires DHCS to calculate the required projections based on the data submitted under this bill. Requires the resulting Medi-Cal fee-for-service payment schedule amounts after the application of this bill to be equal to the sum of both of the following:
    
16. The Medi-Cal fee-for-service payment schedule amount for the state fiscal year 2015–16 and,
17. The quotient of the available fee amount projected by DHCS on or before June 15, 2018, for the state fiscal year 2018–19, divided by the total FFS and managed care Medi-Cal emergency medical transports plans, utilizing these billing codes projected by the DHCS on or before June 15, 2018, for the state fiscal year 2018–19.
18. Requires each Medi-Cal managed care health plan to satisfy its obligation under a specified provision of federal Medicaid regulations for emergency medical transports by providing payment to emergency medical transport providers that is equal to the amount of payment described in federal law (known as the “Rodgers amendment”) that requires non-contracting emergency providers to accept as payment in full the amount of the FFS Medicaid rate.
19. Requires the increased payments authorized by this bill to be funded solely from the following:
    
20. The QAF, along with any interest or other investment income thereon;
21. Federal reimbursement and any other related federal funds; and,
22. The proceeds of the QAF, the matching amount provided by the federal government, and any interest earned on those proceeds to be used to supplement existing funding for emergency medical transports provided by emergency medical transport providers and not to supplant this funding.
23. Requires, if there is a delay in the implementation of this bill for any reason, both of the following to apply:
    
24. Permits an emergency medical transport provider subject to the fee to not pay the fee until the FFS payment schedule increases in this bill are approved. Requires the DHCS director to establish a schedule for payment of retroactive fees in consultation with emergency medical transport providers to minimize the disruption to the cash flow of emergency medical transport providers; and,
25. Permits DHCS to retroactively increase and make payment of supplemental rates to emergency medical transport providers.
    
26. Permits the DHCS director to adopt regulations as are necessary to implement this bill, including emergency regulations. Requires the regulations to include, but need not be limited to, any regulations necessary for the administration of this bill, including the proper imposition of the QAF and process for its collection, reporting, and refunds, DHCS administration of this bill, the development of any forms necessary to obtain required information from emergency medical transport providers subject to the QAF, and the provision of details, definitions, formulas, and other requirements.
    
27. Permits DHCS to implement this bill, in whole or in part, by means of a provider bulletin, or other similar instructions, without taking regulatory action, provided that no such bulletin or other similar instructions remain in effect after June 30, 2018.
    
28. Requires DHCS to request approval from CMS the use of fees collected for the purpose of receiving federal matching funds.
    
29. Permits the DHCS director to alter the methodology in this bill to the extent necessary to meet the requirements of federal law or regulations or to obtain federal approval. Requires the DHCS director, after consulting with affected emergency medical transport providers, determines that an alteration is needed, to execute a declaration stating that this determination has been made, to provide a copy, within five working days of the execution of the declaration, to the appropriate legislative fiscal and policy committees.
    
30. Permits the DHCS to add categories of exempt emergency medical transport providers or apply a non-uniform fee per transport to emergency medical transport providers that are subject to the QAF in order to meet requirements of federal law or regulations. Permits the DHCS director to exempt categories of emergency medical transport providers from the fee if necessary to obtain federal approval.
    
31. Requires this bill to be implemented only if and as long as all of the following conditions are met:
    
32. CMS does not determine that the QAF revenues may not be used for the purposes set forth in this bill;
33. The state receives federal approval for the increased Medi-Cal FFS payment schedule increases; and,
34. The state continues its maintenance of effort (MOE) for the level of state funding of emergency medical transports reimbursement for the 2018–19 rate year, and for every subsequent rate year, in an amount not less than the amount that the state would have paid for the same number of emergency medical transports under the rate methodology that was in effect on July 31, 2016.
35. Requires this bill to cease to be implemented if one of the following conditions is satisfied:
    
36. The federal CMS no longer allows the use of the emergency medical transport provider assessment provided in this bill;
37. The Medi-Cal fee-for-service payment schedule increase no longer remains in effect;
38. The QAF assessed and collected pursuant to this bill is no longer available for the purposes specified in this bill;
39. A final judicial determination is made by the California Supreme Court or any California Court of Appeal that the revenues collected pursuant to this bill that are deposited in the Medi-Cal Emergency Medical Transport Fund are either “General Fund proceeds of taxes appropriated pursuant to Article XIII B,” or “allocated local proceeds of taxes,” as used in the California Constitution for purposes of Proposition 98 of 1988, the school funding guarantee; or,
40. The state does not continue its MOE for the level of state funding of emergency medical transports reimbursement for the 2018–19 rate year, or for any subsequent rate year, in an amount not less than the amount that the state would have paid for the same number of emergency medical transports under the rate methodology in effect on July 31, 2016.
    
41. Requires, if all of the conditions in 21) above are met, this bill to be implemented. Requires, if any one of the conditions in 22) above is met, this bill to become inoperative on the date that is six months after the date when any one of the conditions in 22) above is met.
    
42. Makes this bill inoperative in the event of a final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the CMS administrator, that FFP is not available with respect to any payment made under the methodology implemented pursuant to this bill because the methodology is invalid, unlawful, or contrary to any provision of federal law or regulations or of state law. This inoperative provision would take effect on the date that is six months after the date of the final judicial determination that is not appealed, the date of the final judicial determination by a court of appellate jurisdiction that is not further appealed, or on the date of the final determination of CMS.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state General Fund (GF). In addition, $3 million of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot “opt out” or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix.
   
   While the costs to provide essential ambulance services has significantly increased during the past decade, including escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would significantly increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs.
2. Medi-Cal rates for ambulance services. Medi-Cal covers emergency medical transportation when necessary to obtain Medi-Cal covered benefits when a beneficiary’s medical or physical condition is acute and severe, necessitating immediate diagnosis and treatment so as to prevent death or disability. When billing Medi-Cal for a “911 call,” ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services.
   
   Medi-Cal FFS emergency base ambulance rates were increased in 1997 and 1998 and were last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%) pursuant to AB 97 (Committee on Budget, Chapter 3, Statutes of 2011). The ambulance rate reduction was not imposed retroactively but did apply prospectively, beginning on September 5, 2013. The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999.
3. Provider fees. Federal Medicaid law authorizes states to levy fees on health care providers if the fees meet federal requirements. Provider taxes must be broad-based and uniformly imposed (unless waived), and not violate a “hold harmless” prohibition that offsets the tax. Federal regulations allow 19 different classes of health care services on which a provider tax may be imposed, one of which is “emergency ambulance services.” Nearly all states (including California) fund a portion of their share of Medicaid program costs through a fee on health care providers. Under these funding methods, states collect funds (through fees, taxes, or other means) from providers, which are then matched with federal Medicaid funds to provide increased Medicaid (Medi-Cal in California) reimbursement to health care providers. California currently has Medicaid provider fees on hospitals, skilled nursing facilities and intermediate care facilities for the developmentally disabled.
   
4. Calculation of QAF amount owed. This bill establishes how the QAF will be collected in the initial year (beginning July 1, 2018) and then on an on-going basis (2019-20 and thereafter).

For the 2018-19 state fiscal year, this bill would asses a QAF at a rate of 5.1% against the projected gross receipts of all emergency medical transport providers from three reimbursement codes, divided by the projected total transports for the three reimbursement codes by all emergency medical transport providers. Initial payments of the QAF would be made by a provider that rendered 35,000 or more emergency medical transports by July 1, 2018 in order to ensure sufficient funding is provided for the increased rate (in effect, a front-loaded QAF payment from American Medical Response). Other emergency medical transport providers must pay 50% or less of the fee payment described in this paragraph on or after August 1, 2018.

For state fiscal years beginning 2019-20 and thereafter, the QAF amount owed would be calculated differently than the initial 2018-19 fiscal year. The state would determine the total funds amount needed from the QAF to fund the increased Medi-Cal rates projected for the three billing codes based on estimated number of Medi-Cal transports (after taking into account the federal Medicaid matching percentage), DHCS administrative costs and the $3 million GF offset. The projected total funds amount needed from the QAF would be divided by total projected emergency medical transports for the three billing codes to establish the per transport fee.

1. Calculation of the Medi-Cal rate increase amounts from QAF. This bill establishes the formula for how the resulting QAF revenue will be used to fund state administrative costs related to this bill, $3 million for health coverage of Californians (in effect, a General Fund offset), and Medi-Cal rate increases for three emergency medical transportation codes. The state would take the total projected fee revenue from the QAF for 2018-19, minus the amount for DHCS administration costs and the $3 million that goes to health coverage, and then adding the resulting federal financial matching funds to the remaining state funds. The resulting amount would then be divided by the projected number of emergency medical transports to determine the per transport Medi-Cal rate increase for the three reimbursement codes. This amount would then be added to the existing 2015-16 base rates to determine the new Medi-Cal rate.
2. 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 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. Prior legislation. SB 1300 (Hernandez of 2016) would have imposed a QAF on each transport provided by an emergency medical transport provider in accordance with a prescribed methodology. Requires the resulting revenue to be placed in a continuously appropriated fund to be used to provide additional Medi-Cal reimbursement to emergency medical transport providers, to pay for state administrative costs, and to provide funding for health care coverage for Californians. SB 1300 was vetoed by Governor Brown, who stated he supported establishing a QAF to bring in additional federal funding to support emergency transportation services, but that the structure of the rate increase was unlike any other fee structure supported by health care related QAFs, and he was concerned this structure put the state General Fund (GF) at risk for paying the increased rate if the revenue falls short or if the QAF is reduced or removed in the future. The Governor urged the Legislature and ambulance providers to work with DHCS and the Department of Finance to restructure the QAF in a way that protects the GF allows for an increase in reimbursement for emergency transportation services.
   

AB 511 (De La Torre of 2010) would have imposed, as a condition of participation in the Medi-Cal Program, a 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 advanced life support services, as defined. 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.

1. Support. This bill is sponsored by the 911 Provider's Medi-Cal Alliance (911 Alliance), which writes that in 2015, the leadership of six of California's largest private ambulance companies came together to discuss Medi-Cal reimbursement rates for emergency ambulance transports and formed the 911 Ambulance Provider's Medi-Cal Alliance with a mission to work together to help resolve the ongoing issue of low Medi-Cal reimbursement rates.
   
   The 911 Alliance writes that emergency ambulance providers have not seen an increase in base rates for emergency transports in nearly 20 years, and in those intervening years since the last increase, they have twice seen their Medi-Cal rates decreased. In those intervening years, employee wages continue to grow, fuel prices have skyrocketed, health care costs for employees have grown exponentially, the cost of new technology seems to know no ceiling, and worker's compensation rates have climbed steadily. All this has increased the cost to deliver emergency ambulance service to all Californians. This bill would address nearly two decades of a growing difference between the cost to provide emergency ambulance service and the reimbursement for caring for Medi-Cal patients needing emergency medical transportation.
   
2. Recommended amendments. Staff recommends the word “authorization” of the rate increase in subdivision (c) of Section 14129.3 be changed to “required,” and that the requirement that the QAF per emergency medical transport imposed is collected be moved from subdivision (d) of Section 14129.5 to the QAF collection provisions of Section 14129.1.

SUPPORT AND OPPOSITION:

Support: 911 Provider's Medi-Cal Alliance (sponsor)

American Medical Response
Hall Ambulance Service Incorporated

Paramedics Plus

Oppose: None received

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