Apparent Agreement on Prop 56 Tobacco Tax Revenues – Up to $546 Million May Be Allocated for Some Medi-Cal Providers
APPARENT DEAL ON PROPOSITION 56 TOBACCO TAX REVENUES – BUDGET TRAILER BILL RELEASED – HEARING BY SENATE BUDGET AND FISCAL REVIEW COMMITTEE TUESDAY AT 1 PM
Up to $546 Million May Be Allocated for Some Medi-Cal Provider Rate Increases If Certain Conditions Are Met
SACRAMENTO, CA [BY MARTY OMOTO, CDCAN LAST UPDATED 06/12/2017 09:00 PM] – An apparent deal between the Brown Administration and Democratic legislative leaders has been reached regarding how the State will spend the new revenues from the Proposition 56 Tobacco Tax that voters approved last November, providing up to $546 million for provider rate increases – called “supplemental provider payments” – providing that certain conditions are met in the coming 2017-2018 State Budget year. Estimated total revenues from the tax is about $1.3 billion.
The compromise is a victory for Legislative Democrats and Republicans and advocates for providers and people who receive Medi-Cal, who argued that some of the revenues from the new Proposition 56 Tobacco Tax, which went into effect April 1, 2017, should go to provider rate increases, especially for physicians and Intermediate Care Facilities for the Developmentally Disabled (ICF-DD).
Under the agreement contained in AB 120, up to $325 million may be allocated for Medi-Cal physician services; up to $140 million may be allocated for Medi-Cal dental services; up to $50 million may beallocated for Women’s Health; up to $27 million may be allocated for Intermediate Care Facilities for the Developmentally Disabled; up to $4 million may be allocted for HIV/AIDS waiver provider payments.
APPROVAL OF MEDICAID MATCHING FUNDS & AND ASSURANCES OF MEDICAID FUNDING TO THE STATE CRITICAL
However whether or not the actual provider increases are made – and the exact amount – depends on the State getting approval of Medicaid matching funds – called federal financial participation, and other factors regarding federal Medicaid funding. Medicaid funding to the states could be a major issue in whatever health care bill emerges from the US Senate in the coming weeks or months. In addition, changes to federal Medicaid funding could also happen in whatever agreement is reached to approve a new federal budget for the 2017-2018 federal budget year that begins October 1, 2017.
Those factors can influence or impact the availability of the provider rate increases – or “provider supplemental payments” – authorized in AB 120.
HEARING ON BUDGET TRAILER BILLS TUESDAY AT 1 PM
The Senate Budget and Fiscal Review Committee, chaired by Senator Holly Mitchell (Democrat – Los Angeles), is scheduled to hold a hearing Tuesday (June 13th) at 1:00 PM, at the State Capitol, in Room 4203, on all the budget trailer bills released – including AB 120, that contains the compromise allocations of Proposition 56 Tobacco Tax revenues. Brief public comment can be taken – if allowed by the committee chair – at this hearing.
The hearing will be televised live and streamed live by CalChannel.
CDCAN will issue report later this evening listing all budget trailer bills that the Senate Budget and Fiscal Review Committee will hear, including AB 120.
FUNDING ALLOCATED FOR SOME MEDI-CAL PROVIDER RATE INCREASE PROVIDING CERTAIN CONDITIONS ARE MET
AB 120 authorizes funding from the Proposition 56 Tobacco Tax for some Medi-Cal provider rate increases – that the bill calls “supplemental provider payments” – providing that certain specific conditions are met:
- Up to $50,000,000 may be allocated for Women’s Health supplemental payments;
- Up to $27,000,000 may be allocated for supplemental payments to Intermediate Care Facilities for the Developmentally Disabled (ICF-DD);
- Up to $4,000,000 may be allocated for HIV/AIDS waiver provider payments;
- Up to $325,000,000 may be allocated for supplemental payments for physician services; and
- Up to $140,000,000 may be allocated for supplemental payments on dental services.
HOW WILL PROVIDER RATE INCREASES HAPPEN?
According to AB 120, the following must occur before any rate increases are actually implemented, as follows:
- The Department of Health Care Services, the state agency that oversee the Medi-Cal program, shall develop the structure of these provider payments and post those parameters on its Internet Web site by July 31, 2017.
- Each of the individual supplemental payments or rate increases by provider type in Provision 3 (the provision that allocates the funding for provider rate increases if certain conditions are met) shall not be available until all of the following conditions have been satisfied: the director of the Department of Health Care Services shall seek all necessary federal approvals to implement Provision 3; Provision 3 shall not be implemented until all necessary federal approvals have been obtained; Provision 3 shall be implemented only to the extent the Department of Health Care Services determines federal financial participation (federal matching Medicaid funding) is available and is not otherwise jeopardized. Each of the supplemental payments by provider type in Provision 3 may be implemented independently as federal approval is received.
- The funding for provider rate increases in Provision 3 applies only to the extent federal Medicaid policy does not reduce federal financial participation as projected in the annual budget act as determined by the Governor’s Department of Finance.
- On January 10, 2018, and again on May 14, 2018, based on a determination of the state’s fiscal condition by the Director of the Governor’s Department of Finance, the Department of Finance may direct the Department of Health Care Services to adjust supplemental provider payments as budgeted in Item 4260-101-3305, up to a total of $800,000,000, for the following fiscal year (in this case, the 2018-2019 State Budget year that begins July 1, 2018).
- In determining the state’s fiscal condition, the Director of the Governor’s Department of Finance may consider factors that include, but are not limited to, projected Medi-Cal pharmacy rebates; projected Medi-Cal expenditures; California Healthcare, Research and Prevention Tobacco Tax Act of 2016 (Proposition 56) Revenues; the projected General Fund reserve, and economic factors. For funds allocated pursuant to this section for supplemental provider payments to physicians and dentists in Item 4260-101-3305, 70 percent of the allocations for these two provider types shall be for physician payments, and 30 percent shall be for dental payments.