CHA News Article

Governor Signs State Budget

Today Gov. Brown signed the $201 billion state budget for the 2018-19 fiscal year, which begins July 1. In signing his last state budget, the Governor remarked that he has fulfilled a pledge to bring California out of the abyss it faced in the recession when he took office eight years ago. The new budget sets aside more than $16 billion that the state can use in a recession, something Brown has made a priority in the last several years.

Medi-Cal spending on Medi-Cal in the budget is $104 billion, approximately $7 billion more than last year. Other highlights of interest to hospitals include:

340B Drug Discount Program
CHA is pleased to report that the Administration’s proposal to eliminate the 340B drug discount program in Medi-Cal was rejected by the Legislature and, therefore, is not included in the budget. The Administration had proposed trailer bill language to prohibit hospitals from purchasing discounted drugs through the 340B program for Medi-Cal managed care and fee-for-service patients, in order to eliminate duplicate discounts of drugs purchased through the 340B program. The proposal would have completely eliminated the savings hospitals currently achieve through the 340B program.

Approximately 175 hospitals participate in the 340B program, along with many community health centers. CHA and the community health centers continue to work with the Department of Health Care Services to resolve the issue of duplicate discounts in the 340B program.

Proposition 56 Graduate Medical Education
CHA is also pleased to report that the 2018-19 budget provides the University of California an additional $40 million in core funding. The proposed budget in January had decreased funds to UC by this amount while providing $40 million in Proposition 56 funding for graduate medical education (GME). Proposition 56 GME dollars are intended to increase the number of primary care and emergency physicians trained in the state by supporting residency programs in primary care and emergency medicine. CHA had lobbied the budget committees to restore these funds to UC.

Proposition 55
Despite CHA’s efforts, no funding from Proposition 55 revenue was added to the Medi-Cal program because of the Administration calculation of the proposition’s revenues and workload. Passed by the voters in 2016, Proposition 55 extended the increased tax rate for high-income Californians in order to increase resources for public schools and provide adequate funding for essential health services for children and families enrolled in Medi-Cal. CHA will continue to advocate for funding in the next budget year, which represents the first full year the measure is effective.

Assembly Bill 1810 (Budget Committee) – Health Budget Trailer Bill
AB 1810 is one of this year’s budget health trailer bills, which contains a number of health related items:

Council on Health Care Delivery Systems
AB 1810 will enact the Council on Health Care Delivery Systems, which establishes the intent of the Legislature to provide coverage and access through a unified financing system for all Californians; control health care and administrative costs; ensure high-quality health care; limit out-of-pocket costs; train and employ an adequate health care workforce; and ensure all Californians have timely access to necessary health care. The five-member council will have three members appointed by the Governor and one each by the Senate and Assembly, as of Jan. 1, 2019. 

The council is directed, on or before Oct. 1, 2021, to submit a plan to the Legislature and the Governor with options that include a timeline of the benchmarks and steps necessary to implement health care delivery system changes, including steps necessary to achieve a unified financing system. The plan must also include design options, potential requirements for federal waivers and federal statutory changes related to federal funds, options for financing, analysis of the need for voter approval, and the need for information technology systems and financial management systems. The council is authorized to establish advisory committees made up of members of the public. 

The council will be required to prepare an in-depth study of what would be necessary to create a health care delivery system in California that provides coverage and access through a unified financing system for all Californians. This specific provision was included as part of a budget agreement between the Governor and legislative leaders.

Health Care Cost Transparency Database
Under AB 1810, the Office of Statewide Health Planning and Development (OSHPD) is directed to establish and administer the Health Care Cost Transparency Database to collect data from health care service plans, health insurers and other payers regarding payments and pricing for health care services. OSHPD is directed to convene a review committee of health care stakeholders and experts to provide guidance for developing the database. OSHPD also must submit a report to the Legislature by July 1, 2020, identifying specific information that will need to be collected; additional legislation needed to ensure the database receives appropriate data and  protects the confidentiality of the data; and how to finance the database.

Licensing and Certification – Los Angeles Facilities Fee
AB 1810 also authorizes the Department of Public Health in Los Angeles County to assess a supplemental licensing fee on all health facilities in the county. The fee will be used to cover the costs of enforcing state licensure standards and federal compliance activities, beginning in 2018-19. The supplemental fee reflects the fact that it costs more for Los Angeles County to enforce these requirements, compared to the California Department of Public Health, which enforces the requirements in the rest of the state.

Health Information Exchange Funding
The budget includes $50 million ($5 million from the General Fund) for the development of health information exchanges (HIEs) to facilitate health information sharing between health systems, to be distributed by DHCS. The Centers for Medicare & Medicaid Services will match state funding for HIE expansion.

Housing and Homelessness
The budget includes more than $700 million in funding to address homelessness. The centerpiece of the homelessness package is $500 million for Homeless Emergency Aid to local governments, as well as an additional $200 million to address and prevent homelessness and provide supportive services for vulnerable populations. 

The Homeless Emergency Aid Block Grants distribute $500 million in one-time funding for flexible solutions to address homelessness through:

  • $250 million to continuums of care based upon a grouping methodology that relies on the 2017 Point-in-Time count of homeless persons
  • $100 million to continuums of care based on their proportion of the statewide total of the 2017 Point-in-Time count
  • $150 million directly to cities with a population of more than 330,000 that meet specified requirements based on their regional proportion of the statewide total of the 2017 Point- in-Time count

The budget also supplements existing programs with revenues from the General Fund to address homelessness, as well as authorizes additional one-time revenues for new programs targeted at vulnerable populations. Some of the programs include:

  • $24.2 million in additional funding for the Housing Support Program, which helps CalWORKS families secure permanent housing by allowing counties to provide move-in assistance, temporary rental subsidies and case management. The budget includes an additional augmentation in 2019-20 to increase total funding for the program from $47 million to $95 million annually moving forward.
  • $8.1 million in 2018-19 and $15.3 million in 2019-20 to increase the daily payment rate for temporary assistance to families experiencing homelessness or facing imminent eviction.
  • $15 million in one-time General Fund monies to establish the Home Safe Pilot Program, a homelessness prevention demonstration grant program for victims of elder and dependent adult abuse and neglect, serviced by county-run Adult Protective Services. Participating counties can use the funding for housing-related supports and services and will be required to match the funding.
  • $50 million to DHCS for allocation to counties to provide multi-disciplinary teams that support intensive outreach, treatment and other services for homeless persons living with mental illness. Counties would be encouraged to match this one-time funding with local and federal matching funds. 
  • $10 million to assist victims of domestic violence with shelter, both short and long-term. This funding will flow through the Office of Emergency Services.
  • $10 million to continue to fund the Homeless Youth and Exploitation Program through the Office of Emergency Services. The grant program, in six counties, helps provide for the immediate needs of homeless youth.

Incompetent to Stand Trial Mental Health Diversion Program
The trailer bill implements a mental health diversion program with a focus on reducing the number of individuals referred to the Department of State Hospitals because they are incompetent to stand trial. The budget agreement includes $100 million over three years for counties to enter into contracts with the Department of State Hospitals to provide mental health treatment and wraparound services. It requires the Department to consider local discretion and flexibility in diversion activities that meet the community’s needs.

CHA will provide more details on these and other budget issues over the next few weeks.