201 S. Anaheim Blvd.
Suite #300
Anaheim, CA 92805
Tel: (714) 765-4000
Fax: (714) 765-4008
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
FIRE AND RESCUE DEPARTMENT
DATE: JULY 22, 2025
FROM: FIRE AND RESCUE DEPARTMENT
SUBJECT: APPROVE AGREEMENTS WITH CALIFORNIA DEPARTMENT
OF HEALTH CARE SERVICES AND CALOPTIMA HEALTH
FOR A ONE-TIME INTERGOVERNMENTAL TRANSFER
ATTACHMENT (Y/N): YES ITEM # 12
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That City Council, by Motion:
1. Approve the Health Plan-Provider Intergovernmental Transfer Rate Range Program Agreement with the California Department of Health Care Services (DHCS), in the amount of $1,230,322 representing $1,025,268 for a program plus a $205,054 assessment fee, for a one-time Intergovernmental Transfer (IGT) to recover unreimbursed ambulance transport revenues for a term effective through June 30, 2027.
2. Approve the Intergovernmental Agreement Regarding Transfer of Public Funds with CalOptima Health (CalOptima) to help recover unreimbursed City costs for service for an administrative fee of 2% of the IGT funds resulting in an estimated revenue of $2,916,306 from CalOptima, less CalOptima’s 2% share for a term of January 1, 2024 through June 30, 2027.
DISCUSSION:
In 2019, Anaheim Fire & Rescue transitioned its Ambulance Program to a new cost recovery structure that allowed the City of Anaheim (City) to become eligible for federal reimbursements. An Intergovernmental Transfer (IGT) allows California’s Medi-Cal managed care plans to partner with local government agencies to access additional federal Medicaid dollars to support unreimbursed care and provide health care services.
The City currently participates in the Public Provider Ground Emergency Medical Transportation Intergovernmental Transfer (PP-GEMT IGT) Program which has proved instrumental to the growth of revenues and operational capacity of Anaheim Fire and Rescue’s Ambulance Program. PP-GEMT IGT revenues to the City have increased from $5.8M to $8.7M annually in the past few years and are expected to continue to grow with continued participation in the PP-GEMT IGT Program.
Agreements with DHCS and CalOptima for a One-Time Intergovernmental Transfer for FY 2025/26 July 22, 2025
In Fiscal Year 2024/25, Anaheim Fire & Rescue was introduced to a new supplemental reimbursement program to help recover unreimbursed City costs for service related to CalOptima patients. CalOptima is the sole Medi-Cal managed care plan in Orange County, and is the only Medi-Cal managed care plan in the state approved to retain IGT funds. CalOptima’s funding comes primarily from DHCS, which makes monthly payments to CalOptima based on per member rates for the provision of covered services. An IGT allows DHCS to increase the rates paid to managed care plans like CalOptima using federal matching funds. The IGT process involves a partnership between managed care plans (CalOptima) and other governmental entities (funding partners) such as the City.
The new supplemental reimbursement program is called the Voluntary Rate Range Intergovernmental Transfer Program (VRR-IGT). The program is managed by DHCS and is facilitated by CalOptima and allows Anaheim Fire & Rescue to recover unreimbursed City costs for service provided to CalOptima patients. Due to the nature of EMS cost recovery in the healthcare industry, the City has limited control over the actual amount of revenue collected.
Adjustments made by various payor sources (i.e. insurance plans, including state and federal insurance programs such as Medi-Cal) mean that the City is not fully reimbursed for EMS Services. The VRR-IGT Program allows the City to draw down additional federal funds to offset previously unreimbursed costs for providing ambulance transport services to Medi-Cal plan members.
To participate and receive funds from the VRR-IGT Program, the City transfers an amount to DHCS representing uncompensated costs provided to CalOptima members (IGT Transfer Amount), including an additional assessment fee of 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, CalOptima on behalf of the DHCS will reimburse the City the original IGT transfer amount, the 20% DHCS assessment fee, and 98% of the additional reimbursement revenue. Only 98% of the additional reimbursement revenue is provided to the City because CalOptima retains a 2% administration fee to cover expenses for administering the IGT payments.
The City’s participation in the VRR-IGT Program is dependent on available federal funding and the City’s ability to provide the upfront contribution required. The contribution and net revenue received from the VRR-IGT Program is also dependent on other factors, such as the number of program participants in the County and the number of Medi-Cal calls for service.
Regionally, cities such as Huntington Beach, Newport Beach, and Orange participate in the VRR-IGT Program, along with the Orange County Health Care Agency, and UCI Health.
If City Council approves the recommended actions, the agreement with DHCS will require an upfront payment of $1,230,322, which includes a 20% assessment fee of $205,054. Once reimbursement is available, the agreement with CalOptima will allow the City to receive an estimated $2,916,306 from CalOptima, less CalOptima’s 2% share. Based on these estimates, the estimated net revenue to the City is approximately $1,685,984.
Agreements with DHCS and CalOptima for a One-Time Intergovernmental Transfer for FY 2025/26 July 22, 2025
ESTIMATE for City of Anaheim Amount
1. City of Anaheim IGT Transfers to DHCS $ 1,025,268
2. City of Anaheim Additional 20% State Fee to DHCS $ 205,054
3. Federal Match of City of Anaheim IGT $ 1,720,392
4. Increased Capitation Payment from DHCS to CalOptima Health $ 2,950,714
5. City of Anaheim's Initial Contribution (Original transfer + 20% State Fee) 1,230,322
6. Net IGT Transaction Revenue for Orange County 1,720,392 98% Share for City of Anaheim $ 1,685,984
2% Share for CalOptima Health $ 34,408
7. Total Payment to City of Anaheim $ 2,916,306
Rate of Return for City of Anaheim 137%
The amount the City initially transfers will be reconciled to actual enrollment for the service period January 1, 2024 – December 31, 2024 using actual enrollment figures taken from DHCS records. Enrollment reconciliation will occur on an ongoing basis as updated figures are made available. If, after the enrollment reconciliation, there is an increase to the amount needed to fund the nonfederal share, the City will be required to transfer additional funds to cover the difference. If, after the reenrollment reconciliation there is a decrease to the amount needed to fund the nonfederal share, the City can choose to receive the additional funds from DHCS. If mutually agreed upon by DHCS and the City, amounts due to or owed by City may be offset against future transfers. Actual enrollment figures for this IGT capitalization rate period will be considered final two years after December 31, 2024.
This agenda item supports Anaheim Strategic Plan, Goal A -Maintain Financial Responsibility, Strategy 1- Identify potential new funding sources/revenues to increase City revenues to maintain and enhances services.
IMPACT ON BUDGET:
Sufficient funds are available in Anaheim Fire & Rescue Department’s Fiscal Year 2025/26 General Fund Budget.
Respectfully submitted,
Patrick Russell
Fire Chief
Attachments:
1. Agreement with California Department of Health Care Services
2. Agreement with CalOptima Health