TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Sean deMetropolis, Fire Chief
1. Subject
title
Agreements with the California Department of Health Care Services and CalOptima for a one-time Intergovernmental Transfer for Fiscal Year 2024-2025.
body
2. Summary
A request for City Council approval to participate in a one-time Intergovernmental Transfer for the twelve-month period ending December 31, 2023, to access additional Federal Medicaid dollars to support unreimbursed care.
3. Recommended Action
recommendation
1. Approve agreements with the California Department of Health Care Services and CalOptima in the amount of $694,640 representing $578,867 in unreimbursed Medicare revenue plus a $115,773 administration fee, for a one-time Intergovernmental Transfer, and authorize the Mayor and City Clerk to execute on behalf of the City.
2. Authorize the advancement of $694,640 from the General Fund (100) to the California Department of Health Care Services.
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4. Fiscal Impact
The General Fund (100) will advance the Department of Health Care Services $694,640; however, the City will receive a total return of $1,273,507, which includes the initial advance and the City’s $578,867 share of unreimbursed Medicaid funds from the Intergovernmental Transfer revenue.
5. Strategic Plan Goals
Goal 1: Provide for a Safe Community
b: Provide and maintain infrastructure necessary to ensure the safety of the public.
Goal 2: Be a Fiscally Healthy Community
a: Expend fiscal resources responsibly.
6. Discussion and Background
An Intergovernmental Transfer (IGT) allows California’s Medi-Cal managed care plans to partner with local units of government to access additional federal Medicaid dollars to support unreimbursed care and provide health care services. Since the City provides ambulance transport services and has unreimbursed Medicaid expenses, it became eligible to participate in the IGT program in Fiscal Year 2014-2015 (FY15). Currently, the University of California, Irvine (UCI), the City of Newport Beach, and the City of Orange are participants. In Fiscal Year 2023-2024 (FY24), the net revenue received from the program was $500,326.
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% administration 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 again reached out to the City to participate in the program for Calendar Year 2023 (CY23). The details of the City’s participation are as follows:
|
IGT Contribution from City |
$ 578,867 |
|
20% Admin Fee |
$ 115,773 |
|
Total IGT Transfer to DHCS for CY23 Program |
$ 694,640 |
|
Estimated unreimbursed IGT Revenue available for CY23 |
$ 1,157,734 |
|
Where of, |
|
|
50% of that additional revenue goes to City, and |
$ 578,867 |
|
50% of remaining revenue available goes to CalOptima |
$ 578,867 |
|
Upon reimbursement, |
|
|
Cal Optima will return to the City the original IGT contribution, 20% administrative fee, and 50% of IGT revenue available |
$ 1,273,507 |
|
Estimated net revenue that will be received by the City in Fiscal Year 2024-2025 (FY25) |
$ 578,867 |
On June 10, 2024, the City submitted a non-binding letter to DHCS confirming our interest in participating in the program. If the City intends to move forward, two agreements need to be executed:
1) Intergovernmental Agreement regarding transfer of public funds between the City and DHCS; and
2) Health Plan-Provider Agreement between the City and CalOptima.
Approximate Timeframe for IGT participation:
June 2024: CalOptima advised DHCS the City will be participating in the IGT program at a funding level of $659,183.
September 2024: Agreements will be signed and submitted to DHCS for their review and approval.
January 2025: City will receive an invoice from DHCS for $659,183 representing estimated unreimbursed Medicaid expenses for the twelve months ending December 31, 2023.
After payment is received DHCS will send the additional revenue to CalOptima for disbursement. CalOptima will distribute an estimated amount of $1,273,507 back to the City within the 30 days specified in the Provider Agreement, of which $578,867 is the estimated 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.
DHCS requires program participants to obtain City Council approval before routing final agreements for execution. The final agreement has been reviewed by the City Attorney's office and is included as an attachment for your reference. While funding is not guaranteed, successful participation in previous program years has generated supplementary revenue for the City and staff recommends that the City pursue this additional reimbursement.
7. ATTACHMENT
• Intergovernmental Agreement - City of Orange - CY23