03.04 DHCS and CalOptima1. SUBJECT
Participate in a one -time Intergovernmental Transfer (IGT) with the California Department of
Health Care Services (DHCS) and Cal Optima.
2. SUMMARY
A request for City Council approval to participate in a one -time IGT in Fiscal Year 2017 -2018
(FYI 8) to access additional federal Medicaid dollars to support unreimbursed care.
3. RECOMMENDED ACTION
1) Approve agreements and authorize the Mayor and City Clerk to execute on behalf of the
City.
2) Authorize the transfer of $432,772 of reimbursable funds to the California Department of
Health Care Services (DHCS).
4. FISCAL IMPACT
Reimbursable funds of $432,772 will be advanced to obtain previously unreimbursed Medicaid
revenue of $477,550. The total amount of $910,322 will be received by early 2019. Funds are
available in the General Fund (100).
5. STRATEGIC PLAN GOAL(S)
2. Be a fiscally healthy community.
[a]. Expend fiscal resources responsibly.
[b]. Analyze future fiscal needs and potential revenue opportunities.
6. GENERAL PLAN IMPLEMENTATION
Public Safety Goal 3.0: Protect lives and property of Orange residents and businesses from
urban and wildland fire hazards.
Policy 3.8 Ensure that the Fire Department has sufficient capacity, stations, personnel, and
equipment to meet growth needs in the City for fire protection and related emergency services.
7. DISCUSSION and BACKGROUND
An IGT allows California's Medi -Cal managed care plans to partner with local units of
government to access additional federal Medicaid dollars and use them to support unreimbursed
care and provide health care services. Since the City provides ambulance transport services and
has unreimbursed Medicaid expenses, it is eligible to participate in the IGT program. Prior to
FYI 5, cities were not yet eligible and only the University of California, Irvine (UCI) participated
in the program. Currently, UCI, the City of Newport Beach, and the City of Orange are
participants. In FY 15, 16 and 17, the City received net revenue of $140,398, $152,701, and
$180,956, respectively.
Provisions of the IGT require the City to transfer an amount representing 50% of unreimbursed
CalOptima patient charges (the IGT amount) to the California State Department of Health
Services (DHCS). The City also remits an administrative fee equal to 20% of the IGT amount.
DHCS uses the original IGT amount to access the Federal government's highest allowable Medi-
cal reimbursement rate, enabling them to draw down additional Federal funds on behalf of the
City. Upon reimbursement from the Federal government, Cal Optima reimburses the City the
original IGT amount, the 20% administrative fee, and 50% of the additional reimbursement
revenue (the maximum allowed recovery amount under the program). The amount received is
based on the rate range and the number of CalOptima providers.
While ultimate funding is not guaranteed, DHCS did reach out to the City to participate in the
program for FYI 8. The details of the City's participation are as follows:
IGT Transfer to DHCS -FY 18
$
432,772
IGT Amount
360,643
20% Admin Fee
7 2,12 9
Total IGT to DHCS
$
432,772
Estimated IGT Revenue
$
955,099
50% Additional Revenue to City
$
477
Total Received back from DHCS
$
910,322
ITEM_ 2 7/10/2018
On December 5, 2017, the City submitted a non - binding letter to the DHCS confirming our
interest in participating in the program. If the City intends to move forward, the DHCS requires
two (2) agreements to be signed:
1) Intergovernmental Agreement regarding transfer of public funds between the City and
DHCS, and
2) Provider Agreement between the City and CalOptima.
Approximate Timeframe for IGT participation:
In May 2018, CalOptima advised DHCS the City will be participating in the IGT program
at a funding level of $432,772.
In July 2018, all agreements will be signed and submitted to DHCS for their review and
approval.
Starting in the third quarter of calendar year 2018 (CY18), the City will wire DHCS
$432,772 for FYI 8.
In the first quarter of calendar year 2019 (CY 19), DHCS will send the additional revenue
to CalOptima for disbursement. CalOptima will distribute $910,322 back to the City
within the 30 days specified in the Provider Agreement, of which $477,550 is the net
revenue to the City.
Specifics of this IGT participation require additional monies received to be used for transport
services. Allowable expenditures include salaries for transport personnel, related materials and
supplies, and capital expenses. While there are no specific guidelines or obligations, the
additional revenue received should be used within a year after receipt. There are no guarantees
that future monies for reimbursement will be available; as such, this revenue should be viewed as
one -time funding only. Although funding is not guaranteed, successful participation in the FY 15,
FY 16 and FY 17 programs, did net the City supplementary revenue, and staff recommends the
City seek this additional reimbursement. The federal match for the FY18 rate year changed, as
the rate now includes the Optional Medicaid Expansion population for which the match is 5%
state /95% federal. This makes the overall return much higher, and therefore the City's portion is
also much higher this year.
8. ATTACHMENTS
• Intergovernmental Agreement regarding transfer of public funds between Orange and DHCS.
• Provider Agreement between Orange and CalOptima.
ITEM_ 3 7/10/2018