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May 10, 2019

State Budget: May Revise

On Thursday, Governor Newsom released his May Revision to his January budget proposal.  The May Revision projects short-term revenues of $3.2 billion above the Governor's Budget. However, most of the increased revenues are constitutionally obligated to reserves, debt repayment, and schools. Therefore, the budget surplus remains relatively unchanged. Despite the short-term gains, slower economic growth leads to a lower forecast in out-year revenues—$1.6 billion lower in 2022-23 compared to the forecast in January.  The Governor, as in years past, continues to highlight the eventual economic downturn and the need for California to be prepared to weather the storm.

Focusing on health care, the May Revise includes an additional $1.1 billion in State General Fund for a variety of health and human services programs.

Coverage for Undocumented Young Adults. The budget includes $98 million to cover undocumented adults age 19-25.  The amount allocated to this is slightly lower due to a delayed implementation date and a revised calculation of the number of individuals covered.  He did not follow the Legislature’s wish to cover all undocumented adults over age 19 and commented that that proposal would be cost prohibitive.

Insurance Subsidies. The budget proposes to expand further his proposal to increase subsidies to California working families who purchase coverage through Covered California.  This will include subsidies for families between 200-400 percent of poverty and 400-600 percent of poverty.  The expanded subsidies should equate to average relief for costs for eligible Californians of $100 per month.  The Governor proposes to have the subsidies sunset in three years, and states that they are “a bridge to the work of the Healthy California for All Commission,” which he proposes to focus on bringing California into a single payer health care system.

Bulk Drug Purchasing Proposal. The Governor’s budget proposal does not speak specifically to his Executive Order related to drug bulk purchasing.  However, he does note savings of $393 million General Fund savings by 2022-2023 due to moving the pharmacy benefit in the Medi-Cal program from the managed care plans to the fee-for-services program.  In his press conference, he made it clear that none of these savings were the result of changes to the 340B program.

Health Care Workforce.  The Governor includes an increase of $122 million for health care provider training.  $50 million additional for current OSHPD training programs; $38.7 million in Prop 56 for “residency programs at hospitals throughout California….” and $33.3 million for Song Brown programs.  Along with other funds, the budget states that over $600 million in funding in the coming years will be allocated to meet our future health care workforce needs.

Prop 56 Expenditures. Using Prop 56 funds (tobacco tax), the Governor is making a series of significant additions to the health care budget.  It is noteworthy that he states again, that this is just a bridge to our single payer health care system:

-      $1 billion for supplemental rate increases for physicians, dentists, and other providers for Medi-Cal services and the Value-Based Payment Program.

-      $120 million loan repayment program for doctors and dentists who commit to service Medi-Cal beneficiaries.

-      $70 million for the Value-Based Payment Program, specifically for behavioral health integration.

-      $25 million ($60 million over three years) to train providers to conduct trauma screenings

-      And $11.3 million to restore optical benefits for adults in the Medi-Cal program.

No MCO Tax Renewal – Yet. The budget includes a general fund reduction in the health care budget to reflect the expiration of the current Managed Care Organization (MCO) tax on June 30, 2019.  The MCO tax is a tax on health plans that when matched with federal funds brings approximately $1.2 billion investment into our Medi-Cal system.  While the health plans and Administration have worked through the details of a new, revised MCO tax (and plans were surprised it was not included in the budget), the Governor indicated that the state had a great number of waivers pending at the federal level and he wanted to make sure “conditions were ripe” and to be strategic before submitting the plan for CMS approval.  No set date on when that might be.

Whole Person Care Pilots. The budget adds $20 million of Mental Health Services Act funds to the already proposed $100 million state general fund to develop these programs that seek to coordinate health, behavioral health, and critical social services, like housing.

Infectious Diseases. The budget includes, within the Department of Public Health (DPH) budget, an allocation of $40 million in one-time general funds to address California’s high rates of preventable infectious disease rates, including HIV and AIDS.  The funds are offered through local public health departments for testing, prevention and treatment services and will be available over 4 years.

Emergency Preparedness for Health Facilities. The DPH budget also includes just under $1 million to support health care facilities and shelters in disaster prepared, response and recover efforts.  Funded activities include deployment of infection control teams and continuous updates to an existing health facility mapping application used during disasters.

Hospital Safety Net Investment. Not included in the budget was a recalculation of the allocation of Proposition 55 funds.  While the Governor increased a variety of supports for health care, he missed a tremendous opportunity to use these funds to support California’s safety net hospitals facing the challenges of the state’s behavioral health care crisis, providing care in rural communities, training medical professionals, and that are under threat of federal cuts to needed funding.

Next steps: The Legislature has already scheduled these items to be heard in budget subcommittees next week, and they plan to close out and vote on these items by the week of May 20th.  These proposals, as well as the January budget proposals, will then move to the full budget committees.

Unresolved issues will be sent to be negotiated in Conference Committee, and then onto the Floor of each house for vote.  The budget must be sent to the Governor by June 15th.

The Department of Health Care Services issued a summary document of the Governor’s May Revise proposal that focuses on the new budget items under their jurisdiction.  It provides a bit more detail on some of the issues in the Revise.  You can find that document via this link here:

May 10, 2019

Nurse Staffing Ratio Penalties

With very little debate, SB 227 (Leyva) passed off the Senate Floor this week, without agreement to amend the bill.  The Alliance and the hospital community will continue to oppose the bill as it moves to the Assembly.  The vote count on the Senate Floor was interesting, bi-partisan and is included below:

Ayes: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Durazo, Hertzberg, Hueso, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Skinner, Stern, Umberg, Wieckowski, Wiener

Noes: Bates, Borgeas, Chang, Dodd, Galgiani, Grove, Hill, Jones, Moorlach, Morrell, Nielsen, Stone, Wilk

No Votes Recorded: Glazer, Hurtado, Rubio

You may recall, a similar bill had a rather smooth path in the Assembly last year, with all votes being on party line votes, so much advocacy will be needed in the second house this session.

May 6, 2019

Nurse Staffing Penalty Bill

This week, our advocacy focused on bills being heard on the floors of the two houses.  A key focus was on SB 227 (Leyva), which if passed would impose unnecessary and restrictive nurse staffing ratio requirements and exorbitant penalties.  The Alliance opposes this bill and our work this week was focused on educating the members of the Senate about how detrimental this bill would be for their local hospitals.  The Senator had hoped to take up the bill for a vote on Thursday, but she realized she did not have the votes needed to pass it.  She has until the end of the month to get it off the Senate Floor, so there is still ample time for our education work to continue.

May 6, 2019

Senate Health Budget Subcommittee Reviews Governor’s Plan to Focus on Single Payer

On Thursday, the Senate Budget Subcommittee No. 3 on Health and Human Services met and discussed, among other things, Governor Newsom’s revamped “Healthy California For All Commission” that will refocus efforts on a path forward to single payer health care.  The Budget Trailer Bill language (TBL) outlines two reports that the Commission is mandated to provide to the Legislature.  The first one is due by July 2020 (notably after the budget is due to be signed).  This report is intended to include an analysis of the current health care delivery system and short-term suggestions to amend the current system to prepare it for transformation into single payer system.  Topics for review include cost containment, quality improvement, reorganization of state programs, and discussion of coverage expansion options.

The second report is due in February 2021 and is supposed to cover key design considerations for a single payer system including eligibility and enrollment, benefit coverage options, information technology and transparency, provider payment plans, and purchasing arrangements.  It is also supposed to address governance and administration options, including “integration of federal funding sources.”

Senate Budget Subcommittee Chair, Dr. Richard Pan (D-Sacramento), asked for more detail on how the $5 million the Governor wants to fund the Commission is going to be spent, but also took the opportunity to highlight the federal funding aspect of our current and any future health care delivery system.  He pointed out that funding of more than 70% of our current public health care programs comes from the federal government, reminding everyone that any single payer health care system California wants to create will require a great deal of federal support.

Assembly Speaker Anthony Rendon has already come out against this TBL revision and would prefer a “broader conversation” on health care delivery in the State.

He stated to Politico, “if we start closing doors or start narrowing the scope, then we’re not doing justice to the issue.”   Undoubtedly, this will be part of the Budget negotiations moving forward.

You can find the proposed Trailer Bill Language here:

And the Subcommittee’s summary can be found on page 17 here:

May 6, 2019

Study Finds Millions of Children in Medi-Cal Are Not Receiving Preventive Health Services

A new report was released by the state Auditor outlining the lack of appropriate oversight by the Department of Health Care Services (DHCS) into the proper access of children in the Medi-Cal program to medically appropriate and needed preventative care.  This week, the Assembly Health Committee joined the Joint Legislative Audit Committee to review the report, question the Department, and hear from stakeholders, including the health plans, about how best to move forward.  Some of the key findings in the report include:
♦An average of 2.4 million children in Medi-Cal per year did not receive all required preventive services during fiscal years 2013-14 through 2017-18.  California’s utilization rate for preventive services has remained below 50 percent and ranked 40th for all states.
♦Although DHCS has focused on childhood immunizations, it has not met its 80 percent vaccination goal for the past five years with rates ranging from 70 to 75 percent.
♦Many families do not have adequate access to health care providers due, in part, to low Medi-Cal reimbursement rates (some of the lowest in the nation).
♦While DHCS can impose financial sanctions or penalties when plans do not meet established performance levels, plans rarely face such penalties.
♦Although it delegates many of its responsibilities for serving children in Medi-Cal to managed care plans, DHCS does not provide effective guidance and oversight.
♦It relies on plans to perform outreach to families of children who have not used preventive services but does not follow up to ensure plans have done so. It relies on provider information that could be inaccurate and may hinder access to care.
♦Although the State’s diverse cultures – a broad spectrum of ethnicities and languages – have dramatically different utilization rates, DHCS has not done enough to mitigate disparities.

To improve the health of children in Medi-Cal, the Audit recommended that the Legislature should direct DHCS to do the following:
♦Ensure plans assist members in locating out-of-network providers when travel times and distances to in-network providers are unreasonable.

  • ♦Implement a pay-for-performance program to ensure that plans are more consistently providing preventive services to children in Medi-Cal.

    One of the more interesting findings in the Audit was regarding the state’s adoption of “alternative access standards,” giving Medi-Cal Managed Care Plans waivers from meeting the strict time and distance standards that are in place to ensure patients have access to needed care and treatment in a timely manner and within reasonable distances from their homes.

DHCS’ implementation of these new network adequacy requirements shows that children in many parts of the State have limited access to care. State law permits plans to request these alternative access standards if the plans are unable to meet the new time and distance standards. According to state law, DHCS may allow alternative access standards if the requesting plan has exhausted all other reasonable options to obtain providers to meet the applicable standard. After these laws became effective in 2018, plans submitted nearly 80,000 alternative access standards requests for exceptions to the State’s time and distance standards.  Of the almost 10,000 requests that DHCS approved, nearly 70 percent, or 6,800, were for providers who see children in specific zip codes. Counties that include more than 200 alternative access standards include Sacramento, Los Angeles, San Joaquin, San Bernardino and San Diego.  While some of the counties with the largest number of exclusions are rural, many are urban centers.

The audit clearly states that the state needs to increase provider payment rates in order to increase the number of doctors who will provide preventive services to children in Medi-Cal. Their analysis shows that there are not enough doctors in California willing to treat children in Medi-Cal. This is, at least in part, because California’s reimbursement rates are low compared to other states. The report stated that Medi-Cal rates are not always sufficient to allow for the delivery of high-quality, timely services to health plan members. DHCS is working to attract more medical providers for children through recruitment incentives and by providing additional payments for certain services, but these methods are not targeted to specific areas of the State. A recent federal study found that the most effective way to increase provider participation is through increasing reimbursement rates.

You can access the full report and its data sets via this link:

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