Title
Report regarding a resolution approving budget amendment BA-23.038 to the Fire Department FY 2022-23 Operating Budget in the amount of $436,964.50 and allow the City to participate in the California Assembly Bill 1705 (2019) Public Provider Ground Emergency Medical Transport Intergovernmental Transfer (PP-GEMT-IGT) Program. (Richard Walls, Emergency Medical Services Chief)
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RECOMMENDATION
Recommendation
Staff recommends that City Council adopt a resolution authorizing budget amendment BA23.038 to the FY 2022-23 budget in the amount of $436,964.50 and allow the City to participate in the California Assembly Bill 1705 (2019) and the Public Provider Ground Emergency Medical Transport Intergovernmental Transfer (PP-GEMT-IGT) Program.
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BACKGROUND/DISCUSSION
For most of the 21st Century, special interest groups in California have been promoting legislation that would create payment reform as it relates to ambulance transportation. The 2011 passage of Assembly Bill 678 (AB678) led to the Ground Emergency Medical Transport (GEMT) program, a source of revenue that has provided the City approximately $2,326,000 in additional funds to cover specific transportation costs since its inception. Essentially, the GEMT program is limited to public entities and the purpose is to evaluate costs associated with providing care and transportation to a specific type of Medicaid patient and provide a federal subsidy to reduce the impact of the service to the local government's general funds.
To participate in GEMT, an agency must be a public entity and complete a comprehensive annual cost report. This annual cost report is filed with the California Department of Healthcare Services (DHCS). DHCS evaluates the cost report from each participating agency and creates an average transport cost for California Medicaid patients. Through AB 678, the State developed a Supplemental Reimbursement Program pursuant to California Welfare and Institutions Code Section 14105.94 and State Plan Amendments 09-024. This qualified DHCS to receive matching funds from Centers for Medicare and Medicaid Services (CMS), creating an Intergovernmental Transfer (IGT) for an averaged emergency transport cost. DHCS receives these federally matched funds, subtracts an administrative fee of 10%, then distributes funds based on average transport cost and number of qualifying transports to participating agencies.
While the GEMT program is specific to public providers, most ambulance transports completed in California are operated by private providers. These private providers strove for inclusion in the GEMT program as a means of offsetting their costs and increasing revenue. Many failed assembly and senate bills were proposed in the ensuing years that would amend California law and the Medicaid State Plan to allow for supplemental reimbursement to be given to all ambulance providers.
During the 2017-2018 legislative session, Senate Bill 523 (SB523) was proposed and ultimately chaptered by Governor Brown. SB 523 created a “Quality Assurance Fee”, or “QAF” that is assessed on each completed ambulance transport by both public and private providers. These funds are then transferred to CMS through an IGT like the AB 678 plan, and then redistributed back to ambulance providers based upon the number of qualifying Medicaid ambulance transports completed. Participation in SB 523 is mandatory for all California emergency ambulance operators, and its legislation provides monetary penalties for late submission of reports or payment. Some agencies within California profited due to a high number of Medicaid patients, while others were at a substantial loss. South San Francisco came out slightly ahead on the program.
Many public ambulance and fire service leaders desired a program that was specific to public agencies. The belief was that private ambulance providers make up a large percentage of transports and sharing pooled public and private funds reduces reimbursements. A solely public program would yield more money to be distributed only amongst public providers, and Assembly Bill 1705 (AB 1705) of the 2019-20 legislative session was created.
AB 1705 is titled the Public Provider Intergovernmental Transfer Program, or PP-IGT, and it excludes private providers as the name suggests. AB 1705 was signed by Governor Newsom in October 2019 and is chaptered into law in Welfare and Institutions Code. Some caveats of AB 1705 are that it supersedes SB 523 only while it is in existence. Should AB 1705 fail or become otherwise repealed, all public providers will be rolled back in to the SB 523 program. Additionally, AB 1705 replaces and eliminates AB 678, so the original GEMT program that the City appreciated for greater than a decade will sunset with the 2022 calendar year.
Participation in AB 1705 is voluntary while it is operable, but as stated, should the program be eliminated all providers would again be required to participate in SB 523. Like SB 523 DHCS will review the number of qualifying calls and then invoice the City quarterly for reimbursement of future add-on funds. These funds are pooled by participating agencies and paid to DHCS to access CMS matching through the IGT. The cost of participation in AB 1705 was only recently released as a State Medicaid Plan Amendment (SPA22-0015) and invoicing for payment will begin Mid-December 2022 with payment due January 15, 2023.
Cost, Revenue, and Funding
On Wednesday, November 16, 2022, fire department staff received a document titled Managed Care Estimated CY 2023 Net Benefit Calculation (Exhibit A) from DHCS that details the finances of AB 1705 participation. The document states that the City would have to provide $744,598 plus the 10% administrative fee, in money to be forwarded in the IGT, and is expected to receive a returned amount of $1,693,010 for managed care (MC) transports. A second correspondence from DHCS estimates the City would receive $145,921.44 for fee for service (FFS) transports, requiring $49,883.18 participation, plus a 10% administration fee. This will yield the City a net financial gain of $965,002 from this program. This information is aggregated in Table 1.
Table 1 - Participation fees, administrative fees and proposed reimbursement provided by Department of Health Care Services for participation in the PP-GEMT-IGT program.
|
|
Participation Fee |
10% Administrative |
|
Proposed Reimbursement |
|
Medi-Cal MC |
$744,598 |
$74,459 |
|
$1,693,010 |
|
Medi-Cal FFS |
$49,883 |
$4,988 |
|
$145,921.44 |
|
Total |
$794,481 |
$79,448 |
|
$1,838,931.44 |
|
|
|
Participation and Admin. Fee |
$873,929 |
|
Proposed gain (reimburse - fee) |
$965,002 |
Fire department staff have completed a review on the accuracy of the DHCS calculation and believe that there are some discrepancies in the number of qualifying calls. This creates a difference in actual cost of participation and the expected supplemental reimbursement we should receive. In reviewing qualifying transport data from 2019 thru 2022 (Table 2) and reimbursement increases through proposed add-on (Table 3), staff’s four-year average reimbursement shows that that we should receive a supplemental net increase in transport fees for service of nearly $470,000 annually through this DHCS managed program (Table 4).
Table 2 - Total historical transports that would have qualified for the PP-GEMT-IGT program
|
Various Medi-Cal Programs |
Number of PP-IGT Qualified Transports |
|
|
Calendar Year |
2019 |
2020 |
2021 |
2022 |
|
Medi-Cal FFS |
|
80 |
87 |
91 |
88 |
|
Medi-Cal MC |
|
655 |
758 |
792 |
563 |
|
Medi-Medi |
|
412 |
1107 |
562 |
1080 |
Table 3 - Current base rate reimbursement for transported Medi-Cal patients, new proposed supplemental funding and total expected reimbursement
|
Ambulance Reimbursements |
|
|
Medi-Cal Base Rate |
Add-On (supplement) |
Total Transport Reimbursement |
|
Medi-Cal FFS |
$118.20 |
$946.92 |
$1065.12 |
|
Medi-Cal MC |
$118.20 |
$946.92 |
$1065.12 |
|
Medi-Medi |
$118.20 |
$532.20 |
$650.40 |
Table 4 - Transports from 2019 thru 2022 with base rate, add-on, totals reimbursement and $873,929 participation payment subtracted from total reimbursements for each year and four-year average if PP-GEMT-IGT program existed.
|
Fiscal Year |
2019 |
2020 |
2021 |
2022* |
|
Medi-Cal Base Rate |
$135,575.40 |
$230,726.40 |
$170,799.00 |
$204,604.20 |
|
Add-on Supplement |
$915,252.60 |
$1,389,292.80 |
$1,135,226.76 |
$1,191,220.92 |
|
Total Transport Reimbursement |
$1,050,828.00 |
$1,620,019.20 |
$1,306,025.76 |
$1,395,825.12 |
|
Delta after participation payment |
$176,899 |
$746,090.20 |
$432,096.76 |
$521,896.12 |
|
|
|
Four Year Average Reimbursement Estimate: $469,245.52 |
|
*2022 numbers are projected using data for the first 75% of the year |
Reimbursements vary year over year dependent upon call volume and payor mix. However, staff believes this program will net additional funds for transport services and recommends participation in the PP-GEMT-IGT program. DHCS calculates cost on a calendar year basis and collects this fee quarterly. Reviewing the provided DHCS numbers, staff would need to have the FY 2022-23 budget amended and account for the remainder as well as future calendar year cost in the FY 2023-24 budget.
Staff is requesting the Fire Department FY 2022-23 budget be amended with an increase in the amount of $436,964.50, equal to half the DHCS proposed participation payment for the 2023 calendar year. The remainder plus the first two quarters of calendar year 2024 will be requested in the next budget cycle. We will continue to evaluate the program as it gains establishment and will bring future requests for participation and reimbursement updates from this program to Council.
Relationship to Strategic Plan
This action supports Strategic Plan Priority 5, Financial Stability in that it optimizes financing options and increases revenue for ambulance transports.
Fiscal Impact
Fire department Staff requests a budget amendment in the amount of $436,964.50. The funds would increase the fire department operating budget and be paid out to DHCS on a quarterly basis. These payments would allow the City to participate in the new AB 1705 PP-GEMT-IGT program securing reimbursements. Since the program is new, Fire anticipates getting reimbursements for the $436,964.50 to offset the cost. Staff estimates $235,000 in the remainder of FY 2022-23 budget, or about $470,000 over a 12-month period in additional fees for ambulance transport service above cost for participation. Once the program is established staff will ask to increase the department’s budgeted revenues to reflect this supplemental revenue to our transport fees.
Conclusion
Staff recommends that City Council review this report and adopt a resolution approving budget amendment BA-23.038 to the Fire Department FY 2022-23 Operating Budget in the amount of $436,964.50 and allow the City to participate in the California Assembly Bill 1705 (2019) and the Public Provider Ground Emergency Medical Transport Intergovernmental Transfer (PP-GEMT-IGT) Program.
Attachments:
Exhibit A: MC Calculation
Exhibit B: IGT FF Calculation