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Legislature Passes State Budget

On Saturday the Legislature completed its work on the 2013-14 state budget and corresponding trailer bills. The Governor will sign the budget bill by July 1, the beginning of the state’s fiscal year. Of the more than 20 trailer bills, five are related to the provision of health services.Following are some of the highlights of the trailer bills related to health:

AB 82 (Assembly Committee on Budget) Health: Restores, in part, Medi-Cal adult dental benefits effective May 1, 2014, for $17 million General Fund (GF). This bill also eliminates the seven-visit cap on physician and clinic visits in the Medi-Cal program, a proposal agreed to in a past budget but not approved by the Centers for Medicare & Medicaid Services. The bill also requires the Department of Health Care Services (DHCS) to post on its website proposed State Plan amendments, waiver amendments and waiver renewals that it has submitted to the federal government, providing stakeholders with the opportunity to review and comment on the state’s implementation of policy. AB 82 also transfers mental health facility licensing and quality improvement functions from the Department of Social Services to DHCS.

SB 78 (Senate Budget and Fiscal Review) – MCO Tax: Reinstates a tax on Medi-Cal managed care organizations that failed to be renewed last year. SB 78 imposes a tax in the current year, for which the tax rate would be equal to the gross premiums tax (2.35 percent) to generate $128.1 million GF savings. These current-year revenues will be directed to the Healthy Families Program. The bill also imposes a tax, in 2013-14 and beyond, at a rate equal to the state sales tax rate (3.94 percent), for approximately $343 million in GF savings on an ongoing basis. The tax is expected to generate $644 million in revenues, half of which would be used to draw down federal Medi-Cal funds and to pay back Medi-Cal managed care plans. The other half of the funds would be used to offset GF expenditures for Medi-Cal managed care rates for children, seniors and persons with disabilities, and dual eligibles. The bill includes a sunset of three years, a provision important to the health plans.

SB 83 (Senate Budget and Fiscal Review) – Mental Health: Contains approximately $206 million to improve mental health services, which have not seen any increases in state funding for many years. About $142 million is one-time GF support in the budget year to establish crisis intervention centers and fund mobile crisis teams. CHA supported this budget proposal, which should help hospitals by decreasing emergency department utilization by individuals in need of mental health services.

AB 85 (Assembly Committee on Budget) – County True Up: Since 1991, counties have received funding from the state for various social service and health programs, including indigent health care.  AB 85, referred to as the realignment/CalWORKS trailer bill, contains changes necessary for counties to share with the state the savings from the Medi-Cal expansion pursuant to the Affordable Care Act.  Because many individuals who are indigent today will be eligible for Medi-Cal beginning in 2014, the state will reduce the amount of money it provides to counties for indigent services. This bill reflects the negotiations between the counties and the state. CHA will be issuing further information on this bill in the coming weeks.

SB 94 (Senate Budget and Fiscal Review) – Coordinated Care Initiative: Changes existing law regarding the Coordinated Care Initiative (CCI) and de-links CCI components, allowing the mandatory enrollment of Medi-Cal and Medicare beneficiaries (dual eligibles) into Medi-Cal managed care, the integration of long-term supports and services into managed care plans, and the commencement of the In-Home Supportive Services Statewide Public Authority to proceed separately from the CCI Duals Demonstration Project. The bill requires DHCS, beginning August 1, to convene stakeholders at least quarterly to review progress on CCI and make recommendations to the department and the Legislature for the duration of CCI. It also specifies that if the director of finance estimates that CCI would not generate net GF savings, then the CCI should become inoperative July 1, 2014.

All of these bills — and more — are on their way to the Governor along with the budget bill. It is expected that he will sign all of the bills along with the budget bill well in advance of July 1.