BREAKING NEWS – APPARENT DEAL REACHED ON MANAGED CARE ORG TAX REFORM & SIGNFICANT NEW DEVELOPMENTAL SERVICES FUNDING
SACRAMENTO, CA [BY MARTY OMOTO, CDCAN – LAST UPDATED 02/17/2016 11:10 AM] – An apparent deal has been reached on the Brown Administration’s proposal to revise and extend the existing managed care organization tax reform tied to significant increases in new State general funding for developmental services, both effective July 1, 2016. Legislative staff and advocates are being briefed on the details of the package late this morning and early afternoon. The new general funding for developmental services tied to the passage of the managed care organization tax reform – though not coming specifically from those revenues – totals $281,800,000 – a significant portion of that amount that will be matched by federal Medicaid dollars.
The Brown Administration has been working the past several weeks with managed care health plans, the leadership from both parties in the Legislature and advocates to hammer out a deal on the revision of the existing managed care organization tax – now referred to as a managed care organization tax reform or tax swap – that is set to expire on June 30, 2016 that draws down over $1.1 billion in federal funds. One major stumbling block was overcome last week with the support of the health plans association for the revised managed care organization tax reform. A second hurdle apparently has been overcome this week with agreement reached with the Brown Administration, advocates and Legislative leaders on the amount and specifics of new developmental services State general funding tied to the passage of the revised managed care organization tax reform.
Reaching agreement on the package was complicated because of multiple concerns and issues, especially on how the managed care organization tax reform would be applied and how it would impact managed care organizations and their patients, and also the level of significant new State general funding for developmental services, which had been hard hit by funding reductions and rate freezes and new State and federal mandates going back over a decade.
Some Republican support for the managed care organization tax reform special session bill is crucial because passage requires, under the State Constitution, 2/3rds vote in both the State Senate (27 votes of 40 members) and the Assembly (54 votes of 80 members).
Democrats currently control 26 seats in the State Senate, meaning they would need at least one Republican senator to vote for the managed care organization funding reform, assuming all Democrats vote for it. In the Assembly, Democrats control 51 seats with Republicans holding 28 with one vacancy. Assuming all Assembly Democrats vote for the managed care organization funding or tax reform, at least 3 Assembly Republican votes would be needed to pass it.
The package officially released by the Brown Administration today apparently has the support of enough Senate and Assembly Republicans and Democrats to assure quick passage in both houses in the next few days.
CDCAN will issue a report later today with more details.
SUMMARY OF SPECIFICS OF NEW FUNDING
Of the total of $281 million in new State general funding, effective July 1, 2016, the funding would be allocated to the following (CDCAN will issue more detailed report later today). The new funding would be effective July 1, 2016 and is in addition to what the Governor proposed in January as part of his 2016-2017 State Budget plan:
- DIRECT WAGE PASS THROUGH – REGIONAL CENTER STAFF – $20,500,000 in state general funds, though not for executive staff, in an allocation to be determined by the Department of Developmental Services.
- REGIONAL CENTER ADMINISRATIVE COSTS – $1,400,000 in state general funds for regional center administrative costs, in an allocation to be determined by the Department of Developmental Services. Amount includes an amount to be allocated by the department for regional center Client Rights Advocates contracts.
- COMMUNITY-BASED PROVIDERS ADMINISTRATIVE COSTS – $9,900,000 in state general funds for administrative costs for all community-based providers in an allocation to be determined by the Department of Developmental Services.
- DIRECT WAGE PASS THROUGH – COMMUNITY-BASED PROVIDERS – $169,500,000 in state general funds for a rate increase (direct wage pass through) for direct care staff employed by a community-based provider organization, in a manner to be determined by the Department of Developmental Services
- SUPPORTED LIVING SERVICES AND INDEPENDENT LIVING SERVICES: on top of the direct wage pass through for direct care staff, and administrative costs, a 5% rate increase for these two services
- RESPITE – IN HOME AND OUT OF HOME – 5% rate increase for these two services (in addition to increase for administrative cost and for the direct care wage pass through for applicable direct care staff)
- TRANSPORTATION SERVICES – 5% increase for transportation providers (in addition to the increase for administrative costs and direct wage pass through for applicable direct care staff)
- SUPPORTED EMPLOYMENT PROGRAM – $3.42 per hour increase for supported employment providers (in addition to the increase for administrative costs)
- COMPETITIVE INTEGRATED EMPLOYMENT – $30,000,000 in state general funds for competitive integrated employment incentive payments.
- BILINGUAL STAFF/TRAINING AT REGIONAL CENTERS – $5,000,000 in State general funds for bilingual staff at regional centers, cultural competency training, and parent education efforts, in an allocation to be determined by the Department of Developmental Services in consultation with regional centers.
- COMMUNITY BASED PROVIDER AUDIT REQUIREMENTS – Would change existing State law that currently requires a provider who receives payments from one or more regionals between $250,000 and $500,000 per year to obtain either an independent audit or independent report of its financial statements or if more than $500,000 in payments per year a requirement for an independent, and instead would require a provider to obtain only an independent review report of its financial statements relating to payments made by a regional center if it receives payments between $250,000 and $2,000,000 from one or more regional centers, per year. Would authorize these providers to apply for, and require the regional centers to grant, a 2 year exemption from this requirement if the regional center does not find issues in the independent review report that have an impact on regional center services. Would require a provider to obtain independent audit if it receives payments from one or more regional center that are equal to or more than $2,000,000 per year and would authorize those entities to apply for and require regional centers to grant, a 2 year exemption form the audit requirement if the audit resulted in an unmodified opinion, an unmodified opinion with additional communication, or a qualified opinion with issues that are not material and pervasive.
- DEVELOPMENTAL SERVICES TASK FORCE – There is specific language and deadline directing the task force formed by the California Health and Human Services Agency, regarding a study and recommendations regarding the regional center community-based system of rates and reimbursements, including issues linked to unmet need, cultural disparities, compliance with new federal regulations regarding Home and Community Based Services regulations, employment and work regulations, etc.
- OUTCOMES – nearly all of the new funding increases are tied to specific outcomes and reporting.
SPECIAL SESSION HEARINGS – The developmental services funding will likely be amended into one of both of the special session bills in the special session conference committees, authored by Senator Ed Hernandez and Assemblymember Rob Bonta. The conference committee will likely hold a hearing on the bills possibly on Thursday, with the managed care organization tax reform bill and the developmental services funding bill ltaken up for final floor votes possibly on Monday. None of these dates are firm and nothing official has been announced regarding hearings or floor votes. CDCAN will issue report when additional hearings are scheduled.
FLOOR SESSIONS – A final floor vote on the managed care organization tax reform bill and the developmental services funding bill could occur possibly on Monday – though nothing has been announced officially. CDCAN will issue a report when this information becomes known.