Report 2003-101 Summary - March 2004

County Emergency Medical Services Funds:

Despite Their Efforts to Properly Administer the Funds, Some Counties Have Yet to Reach Full Compliance With State Laws

HIGHLIGHTS

Our review of how counties administer their Emergency Medical Services Funds (EMS Funds) disclosed the following:

  • Over half the counties affected by a statutory requirement that limits the growth of certain revenues for their EMS Funds were not aware of the limitation.
  • The four counties we reviewed either did not have all the necessary or reasonable controls over EMS Fund disbursements or made certain unallowable or questionable payments.
  • Some counties we surveyed reported significant balances remaining in the revenue derived from penalty assessments collected by the courts as of June 30, 2002.
  • Few counties we surveyed reported that their EMS Funds were audited for any purpose.

RESULTS IN BRIEF

To compensate health care providers for emergency services for people who do not have health insurance and cannot afford to pay for emergency care and to ensure that this population has continued access to emergency care, the Legislature has enacted laws allowing each county to establish, finance, and administer an Emergency Medical Services Fund (EMS Fund). Although counties we reviewed are making an effort to administer their EMS Funds properly, some of their practices do not comply with state laws or could benefit from better controls over receipts and disbursements.

As of November 2003, 49 counties had established EMS Funds. Counties finance these funds through several revenue sources: (1) penalty assessments on certain criminal and traffic violations, known as Maddy revenues; (2) a portion of the fees from people attending traffic violator schools; (3) revenues from taxes on tobacco products deposited in the State's Cigarette and Tobacco Products Surtax Fund; and (4) redirected money from the State's Cigarette and Tobacco Products Surtax Fund through an annual Emergency Medical Services Appropriation (EMS Appropriation).

Statute requires a county to allocate specified percentages of Maddy revenues for particular EMS purposes (reimbursements to physicians and hospitals and allocations for administration and "other," or discretionary, costs) from the county's share of penalty assessments. The four counties we reviewed for fiscal year 2000-01 and fiscal year 2001-02 allocated appropriate amounts for these specific purposes.

Of the 49 counties with EMS Funds, 40 established the funds before June 1, 1991. More than half of the counties responding to our survey about their EMS Fund practices, including the four counties we visited, were unaware of a limitation the law places on the growth of Maddy revenues for funds established by June 1, 1991. As a result, these four counties and potentially others did not track the information required to calculate the limitation. It is possible that some counties deposited more revenues than allowed into their EMS Funds, but due to the lack of clarity in the law and the lack of all necessary information in county records, we could not quantify the impact of this issue.

Some counties we reviewed either did not have all the necessary or reasonable controls in place for disbursements or made unallowable payments from their EMS Funds. Three of the four counties we visited, as well as counties that responded to our survey, believe they can use the discretionary account in their EMS Funds for costs that we believe are questionable, including administrative charges such as salaries and supplies for their emergency medical services. If the Legislature does not intend such costs to be charged to the discretionary account, it may choose to amend the law. We also found a variety of practices counties use to reimburse claims from emergency physicians that did not comply with the law or could be improved. Additionally, for three of the four counties we visited, controls over payments from the hospital portion of their EMS Funds should be improved.

The counties we reviewed that administered their own tobacco tax revenues and EMS Appropriations generally spent these funds for the purposes required by law. Further, for fiscal year 2000-01 and fiscal year 2001-02, these counties did not have any unspent tobacco tax revenues or EMS Appropriations, which they otherwise would have to return to the State, as required by law.

Some counties reported significant balances remaining in the Maddy revenues portion of their EMS Funds as of June 30, 2002. The explanations they offered for the balances included lack of a substantial uninsured population unable to pay for their medical services and a limited demand from medical providers requesting these funds. In addition, we noted inconsistencies in the data counties report. Many counties report inconsistent carryover balances between fiscal years without explaining the differences, and many do not include the effect of costs they have incurred but not paid. Including these incurred costs would reduce the reported balances, in some cases significantly. Legislation effective in January 2004 requires counties with surplus balances (after accounting for an allowable reserve) to use this money to proportionally pay an additional amount to physicians who submitted qualifying claims during the year.

Finally, although the law does not specifically require that counties audit their EMS Funds, the Legislature asked us to determine whether counties or other entities are conducting audits. We found few counties report that their EMS Funds were audited for any purpose.

RECOMMENDATIONS

To clarify the law governing deposits of Maddy revenues in counties' EMS Funds, the Legislature should consider taking one of the following actions:

  • Change the current statute to require counties to use the same standards for the amount of Maddy revenues counties can deposit in their EMS Funds, regardless of when the funds were established.
  • Specify how to calculate the allowable amount of growth in Maddy revenues from year to year, including which revenue sources to include and how to account for incomplete data for the activity since June 1, 1991.

To ensure that the counties' use of EMS Funds is consistent with legislative intent, the Legislature may wish to clarify whether counties may use the discretionary portion of their EMS Fund to pay for administrative costs.

To provide greater consistency in the annual EMS Fund report that counties submit to the Legislature, the Legislature should consider directing the Emergency Medical Services Authority to revise the report format to instruct counties to specify the basis—preferably the accrual basis—they must use to report their fund balances. In addition, the revised format should include a requirement that counties explain any differences between the remaining balance of the prior year and the beginning balance of the year being reported.

To strengthen controls over disbursements from their EMS Funds, the counties should do the following:

  • Periodically review selected physicians' records that support claims requesting reimbursement from EMS Funds to ensure the information is accurate and the claim is appropriate for reimbursement.
  • Determine that hospitals' expenditures at least equal the payments they receive from EMS Funds either by asking them to provide support for EMS expenditures or by establishing procedures to review hospital costs.
  • Comply with the law that requires each county to establish a fee schedule to uniformly reimburse its physicians from EMS Funds.

AGENCY COMMENTS

The Department of Health Services, the Emergency Medical Services Authority (authority), the Administrative Office of the Courts, and Los Angeles Superior Court generally concurred with our findings and, except for one issue, three of the counties we reviewed (Los Angeles, Marin, and San Mateo) did as well. Los Angeles and San Mateo counties expressed concern with our interpretation of the law that governs how counties can use EMS discretionary money and all three counties believe they used this money for EMS purposes in a manner consistent with the law. The authority expressed concern that our recommendation to the Legislature will lead to increased expectation for services the authority does not feel it can provide. The three remaining courts we reviewed and Colusa County did not respond to our report.


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