CDCAN REPORT #007-2012: Brown Administration releases proposed budget "trailer bill" language covering eight Department of Health Care Services budget proposals

BROWN ADMINISTRATION RELEASES PROPOSED BUDGET "TRAILER BILL" LANGUAGE COVERING 8 DEPARTMENT OF HEALTH CARE SERVICES BUDGET PROPOSALS

Proposed Legislative Language Makes Necessary Changes in State Law In Order To Implement Governor's Proposals Dealing With Medi-Cal Managed Care Enrollment; Changes How Federally Qualified Health Centers & Rural Health Clinics Are Reimbursed; Interest Rates for Medi-Cal Overpayments and Others - "Dual Eligibles" Language Not Released Yet

SACRAMENTO, CA (CDCAN) [Last updated 01/11/2012 09:30 PM] - The Brown Administration released early this evening proposed budget trailer bill language covering 8 of the Governor's proposed changes and reductions largely dealing with the Medi-Cal program under the Department of Health Care Services budget.  Also released with the proposed budget related language were 7 fact sheets that describe the reasons behind 7 of the 8 proposals (the 8th fact sheet is still being finalized).

The Department of Health Care Services, which among other things, oversees the State's Medicaid program (called "Medi-Cal") announced that the Governor's Department of Finance released the following proposed budget "trailer bill language" and fact sheets covering the following budget proposals by the Governor:

• Annual Open Enrollment - Medi-Cal Managed Care Plans (3 pages - no fact sheet yet)
• Federally Qualified Health Center/Rural Health Clinic Payment Reform (10 pages and 4 page fact sheet)
• California Medical Assistance Commission Staff Transition (2 pages and 1 page fact sheet)
• Hospital Stabilization Funding (3 pages and 2 page fact sheet)
• Interest Rate for Medi-Cal Overpayments (1 page and 3 page fact sheet)
• Rogers Amendment Sunset Date Extension [Rates for Non-Contract Hospitals Providing Emergency and Post-Stabilization Services for Medi-Cal Managed Care Enrollees] (3 pages and 3 page fact sheet)
• Closure of Prior Supplemental Funds for Disproportionate Share Hospitals (7 pages and 1 page fact sheet)

Impact of the Eight Proposed Budget Trailer Bill Language Documents

Of the 8 proposed budget trailer bill language documents released today, 3 of them - dealing with limiting changing enrollment in a Medi-Cal managed care health plan to once a year, and payment changes to Federally Qualified Health Centers and Rural Health Clinics, and the so-called "Rogers Amendment" dealing with non-contract hospitals providing emergency and post-stabilization services for Medi-Cal managed care recipients - could have some direct impact to people with disabilities, mental health needs, the blind, seniors, low income families and certain providers - though all of the proposals have some varying degree of direct or indirect impact.

Budget trailer bill language covering the Governor's biggest (and most controversial) reduction in Medi-Cal State general fund spending of over $670 million during the 2012-2013 State Budget year dealing with transitioning people with disabilities and seniors who are eligible for both Medicare and Medi-Cal - referred to as "dual eligibles" - into Medi-Cal managed health care plans - was not included in this round of budget trailer bill language released today.  CDCAN will send that proposed language out as soon as the Brown Administration releases it.

[CDCAN Note: Attached to this CDCAN Report are the proposed budget trailer bill language for the 8 proposals and 7 fact sheets - saved as pdf documents (and not as a pdf image or picture), which allow people who are blind or sight impaired to use a screen reading device to read it.  All are titled by CDCAN beginning with the date of release - "20120111' meaning January 11, 2012 and with the department's abbreviation - in this case, DHCS - meaning 'Department of Health Care Services"

Apologize for the number of documents - though none are really long - but it is important for people to review it or to pass it on to someone who might or should be interested in the proposal and the proposed budget trailer bill language.  If you don't need it - delete it.  Please don't complain about getting it - at least not to me. I will ignore it. If you don't need it - delete it. Simple. But some of the changes proposed in these documents can have major impact on people's lives in different ways. Pass it on to someone who might be impacted.  Lastly, while we may disagree strongly on certain proposals including some of those already implemented, the Department of Health Care Services should be thanked by everyone for releasing information such as the proposed budget trailer bill language and other documents.  - Marty Omoto, CDCAN]

Why Is Budget Trailer Bill Language Important?

• It is called "budget trailer bill language" because the budget related bills containing the langauge make necessary changes to existing state law to implement certain budget actions propsoed by the Governor or Legislature.  The budget trailer bills follows - or "trails" the main budget bill. This past year however - in March 2011 - some budget trailer bills ended up passing months ahead of the main budget bill due to a long stalemate on the budget revenue proposals calling for temporary increase in taxes. The bills passed in March 2011 were part of a special session called by Governor Brown.and unlike other previous special session when mid-year cuts were made - these budget trailer bills were meant to be passed with the main budget bill in March, to allow the governor's tax proposals to be placed on a June 2011 special election ballot.  That didn't happen - and neither did an early budget but some of the budget trailer bills containing big spending cuts ended up.passed and signed into law in March anyway.
• Proposed budget trailer bill language - whether coming at this stage from the Governor (or in later stages in the budget process from one or both legislative budget committees or conference committees or from one or both houses on the floor) are critical to how a budget proposal is meant to implemented (versus how it is described in a handout or summary) because it makes the necessary additions or changes to state law to make it happen.
• Persons and organizations impacted or interested in the budget proposal that the proposed language deals with should review it carefully to understand what the proposed changes do - and how it will impact them if it is passed into law.  Persons and interested organizations can send their concerns and comments to the main State Senate and Assembly Budget Committees or ask their own State Senator and Assembly to forward their concerns directly to the appropriate department and budget committees.
• The proposed budget trailer bill langauge sometimes are ignored or discarded completed by the legislative budget subcommittees or committees or can be eventually passed as is or more often (for major issues) substantially changed during the several months of the budget process.
• Budget trailer bill language eventually end up in one or more different bills - usually health related budget trailer bill langauge will end up in one bill dealing with health - human services (such as CalWORKS and In-Home Supportive Services) in another bill, and sometimes developmental services in a separate bill or combined with the health trailler bill.  That is later in the budget process in June - right now, at this stage, budget trailer bill language are contained in separate often hard to track and monitor documents with no bill number (though there are internal department reference numbers).
• Budget trailer bill language - and the budget trailer bill that contains the language - are not law until it is passed by both houses of the Legislature and signed by the Governor.

Governor's Proposed Budget Call for Over $4 Billion In Additional Spending Cuts - But Also New Revenues

• As reported by CDCAN on January 5th, Governor Jerry Brown released his proposed 2012-2013 State Budget plan January 5th that calls for over $4 billion in additional massive spending cuts and nearly $7 billion in new revenues from temporary tax increases on the state's wealthiest taxpayers and a one-half percent increase in the state's sales tax, to close what the Governor said is a projected $9.2 billion budget deficit.
• Over $2 billion of the total $4 billion in new cuts will come from health and human services, with reductions there largely centered on four major programs - CalWORKS and child care, Medi-Cal, In-Home Supportive Services and developmental services. Major and dramatic changes proposed by the Governor will also impact other areas, including proposals to replace the Department of Mental Health with a new Department of State Hospital which was previously brought up last May; the proposed elimination of the 11 Caregiver Resource Centers, and a proposal calling for the elimination of the Managed Risk Medical Insurance Board.
• The new proposed reductions appear to be addition to the $1 billion in spending cuts announced in mid-December by the Governor when he also announced that the 2011-2012 State Budget "trigger cuts" would be pulled because projected revenues fell below what was budgeted. However the Governor's budget summary totals do not appear to reflect those reductions, though the narrative and specific details from department estimates do.

CDCAN SUMMARY OF GOVERNOR'S BUDGET PROPOSALS - MEDI-CAL PROGRAM

The state's Medi-Cal program serves over 7.7 million Californians including about 1.7 million people with disabilities (including developmental), the blind and low income seniors.

DUAL ELIGIBLES (MEDI-CAL AND MEDICARE)

• Governor proposing, starting January 1, 2013, over a three year period, to transition the 1.2 million persons with disabilities and seniors who are eligible for both programs (“dual eligible”).
• This includes, in the first year, making IHSS and other home and community-based services and nursing home care funded by Medi-Cal to become Medi-Cal managed care benefits (as mentioned in the section on IHSS).
• However community-based services funded through regional centers under the home and community-based Medicaid waiver will continue to be administered by the Department of Developmental Services
• The transition of Medicare benefits to Medi-Cal managed care will occur over a three year period starting first with 8 to 10 counties that the State believes already have the capacity to serve these individuals.  The Governor’s budget proposes to expand Medi-Cal managed care statewide starting June 2013.
• Dual eligible recipients in these managed care counties will transition during the 2014-2015 State Budget year.
• The Governor’s proposal says it will achieve savings and reductions in State general fund spending as recipients transition from Medi-Cal “fee-for-service” to Medi-Cal managed care plans due to a reduction in utilization including a reduction in hospital and nursing home costs.
• The Governor’s budget estimates that this expansion will mean a reduction in State general fund spending to the Medi-Cal program of about $678.8 million during the 2012-2013 State Budget year which will grow to over $1 billion during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE EXPANSION

• The Governor proposes, beginning in June 2012, to expand Medi-Cal managed care into rural counties that are currently only provide Medi-Cal “fee for service”.
• The Governor’s budget assumes that this proposal will result in a $2.7 million reduction in State general fund spending in the Medi-Cal program during the 2012-2013 State budget year, which will grow to $8.8 million during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE ANNUAL OPEN ENROLLMENT RESTRICTION

• Current law allows Medi-Cal recipients in Medi-Cal managed care plans to change plans once per month or up to 12 times in a year.  The Governor proposes instead a once a year open enrollment period for Medi-Cal recipients in managed care plans, who would have to receive care through that plan for the entire year.
• The Governor’s budget assumes that this proposal will result in a $3.6 million reduction in State general fund spending in the Medi-Cal program during the 2012-2013 State Budget year, to grow to $6 million during the 2013-2014 State budget year.
• Proposed budget trailer bill language covering this proposal released by Brown Administration January 11, 2012. Fact sheet is still being developed and will be released later.

MEDI-CAL MANAGED CARE GROSS PREMIUM TAX

• Governor proposes to eliminate the sunset (or ending) date of this special tax on Medi-Cal managed care plans.
• The Governor’s budget assumes that this proposal will result in $161.8 million in reductions in State general fund spending during the 2012-2013 State budget year, which will grow to $259.1 million during the 2013-2014 State budget year.

MEDI-CAL PROVIDER PAYMENT DEFERRAL & MANAGED CARE PAYMENT POLICIES

• Linked to the proposal to transition persons dually eligible for Medi-Cal and Medicare into Medi-Cal managed care plans, to speed up those budget savings during the 2012-2013 State budget year, the Governor is proposing one payment deferral for all Medi-Cal providers during that budget year.
• His budget also proposes to bring together (or align) payment policies for all Medi-Cal managed care plans.  The savings from these two proposals is part of the overall spending reduction of State general funds total ($678.8 million) tied to the transition of persons who are dual eligible for Medi-Cal and Medicare during the 2012-2013 State Budget year.

MEDI-CAL "OPERATIONAL FLEXIBILITIES"

• With the current projected number of Medi-Cal recipients of 8.3 million Californians expected to swell to over 10 million by January 2014 when the federal health care reform is implemented, the Governor is proposing a new process that will “incorporate stakeholder input and determine cost-effectiveness” before implementing changes in benefits to the Medi-Cal program.
• This would include an assessment of the impact of changes made, changes proposed in payment rates and policies.
• The Governor’s budget indicates that State general fund spending in the Medi-Cal program will be reduced by $75 million during the 2012-2013 State Budget year as a result of this proposal.

FEDERALLY QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS CUTS

• The Governor is proposing that payments made to these health centers and clinics participating in Medi-Cal managed care plan contracts will change from a cost and volume-based payment to a fixed payment to provide a broad range of services to those Medi-Cal recipients.
• A new Medi-Cal waiver will be developed to allow these centers and clinics to follow “efficient best practices” including group visits, telehealth, telephonic disease management, and allow clinics to perform multiple services on the same day.
• Governor’s proposal assumes a spending reduction in State general fund spending in the Medi-Cal program of $27.8 million during the 2012-2013 State budget year, that will grow to $58.1 million during the 2013-2014 State budget year.
• Proposed budget trailer bill language covering this proposal and fact sheet released by Brown Administration January 11, 2012.

PRIVATE AND NON-DESIGNATED PUBLIC HOSPITAL "STABILIZATION" FUNDING CUT

• Governor proposes that Private and Non-Designated Public Hospital "Stabilization" funding that has not yet been paid for the State budget years 2005-2006 through 2009-2010, will instead be put back into the State general fund.
• The Governor’s budget assumes that this proposal will mean a $42.9 million in State general fund spending reduction.
• Proposed budget trailer bill language covering this proposal and fact sheet released by Brown Administration January 11, 2012.

NURSING HOME FEE PROGRAM

• Governor's budget includes funding to restore the 10% provider rate reduction ($171.1 million in State general funds) and also includes supplemental payments ($245.6 million in State general funds).
• The Governor's budget however does not include the maximum 2.4% cumulative rate increase for 2011-2012 and 2012-2013 because "preliminary fee revenues [from the nursing homes] are insufficient to support such an increase."
• The Governor proposes to permanently extend the rate methodology and nursing home fee initially established by AB 1629 in 2004.  The Governor's budget says that this action is necessary "to continue to fund the current payment methodology without a greater impact to the General Fund."

MEDICAL THERAPY PROGRAM ELIGIBILITY RESTRICTION

• The Governor proposes to put in place income eligibility requirements or means testing for the Medical Therapy Program linked to the California Children’s Services (CCS) program.
• Under the proposed new requirements, families with annual incomes less than $40,000 or with annual California Children’s Services medical expenses exceeding 20% of their annual income, will be eligible for the Medical Therapy Program.
• The Governor’s budget assumes this proposal will result in a $9.1 million reduction in State general fund spending during the 2012-2013 State budget year, and $10.9 million during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE RATE ADJUSTMENT

• The Governor's budget includes an increase of $203.4 million in State general fund fpr the 2012-2013 State Budget as a result of increasing managed care rates by 3.61%.
• The rate adjustments are based on the previous year's increase.  The managed care rate increase for 2012-2013 will be updated in the Governor's revised budget proposal in May.

FUNDING TO RESTORE PROVIDER RATE CUTS IF STATE FAILS IN LAWSUITS

The Governor's budget includes a "set aside" of $86.8 million in State general funds for the current 2011-2012 State Budget year and $260.4 million in State general funds for the 2012-2013 State Budget year in the event that various lawsuits blocking or seeking to stop the Medi-Cal provider rate reductions end up being successful.

CDCAN SUMMARY OF GOVERNOR'S BUDGET PROPOSALS - HEALTHY FAMILIES

This program, administered by the Managed Risk Medical Insurance Board, is matched by funds from the federal State Children's Health Insurance Program (SCHIP), provides comprehensive health, dental and vision benefits through participating health plans for children not eligible for Medi-Cal.

HEALTHY FAMILIES PROGRAM RATE REDUCTION

Governor proposes to reduce Healthy Families managed care rates by 25.7%, effective October 1, 2012.  This cut will result in a $64.4 million reduction in State general fund spending in the program during the 2012-2013 State budget year and another $91.5 million during the 2013-2014 State budget year.

TRANSITION OF CHILDREN FROM HEALTHY FAMILIES TO MEDI-CAL

• Governor proposes transferring about 875,000 children in the Healthy Families program to the Medi-Cal program over a nine month period beginning October 2012.
• The Governor’s budget indicates that this transition will simplify eligibility and coverage for children and families, improve coverage through “retroactive benefits, increase access to vaccines,and expanded mental health coverage” and eliminate premiums for lower income recipients.
• There was no budget savings or spending reduction listed resulting from this proposal.

ELIMINATION OF MANAGED RISK MEDICAL INSURANCE BOARD

• Governor proposes elimination of this board by July 1, 2013, with the remaining programs administered by the board shifted to the Department of Health Care Services by that date.
• Those programs include Access for Infants and Mothers, California Health Initiative Matching Fund Program, the Major Risk Medical Insurance Program (MRMIP), the Pre-Existing Conditions Insurance Plan (PCIP).
• The MRMIP and PCIP programs will be eliminated in January 2014, according to the Governor’s budget because individuals in those programs will be able to purchase health insurance through the California Health Benefits Exchange as part of the roll-out of the federal health care reform implementation.

File Attachments: 

2012-01-11 - DHCS - Fact Sheets - All combined.pdf

2012-01-11 - DHCS - Proposed trailer bills - All combined.pdf

2012-01-11 - DHCS - Fact Sheet - 606 Hospital Stabilization Funding.pdf

2012-01-11 - DHCS - Fact Sheet - 607 Interest Rate for Medi-Cal Overpayments.pdf

2012-01-11 - DHCS - Fact Sheet - 609 Extend Sunset Date for Rogers Amendment.pdf

2012-01-11 - DHCS - Fact Sheet - 610 Abolish Four Funds that Are No Longer Used - Disproportionate Share Hospitals.pdf

2012-01-11 - DHCS - Fact Sheet - 620 Federally Qualified Health Center Payment Reform.pdf

2012-01-11 - DHCS - Fact Sheet - 622 CMAC Staff Transition.pdf

2012-01-11 - DHCS - Proposed trailer bill - 606 Hospital Stabilization Funding.pdf

2012-01-11 - DHCS - Proposed trailer bill - 607 Interest Rate Assessed on Collection of Medi-Cal Provider Overpayments and Underpayments.pdf

2012-01-11 - DHCS - Proposed trailer bill - 609 Extend Sunset Date for Rogers Amendment.pdf

2012-01-11 - DHCS - Proposed trailer bill - 610 Abolish Four Funds that Are No Longer Used - Disproportionate Share Hospitals.pdf

2012-01-11 - DHCS - Proposed trailer bill - 618 Annual Open Enrollment.pdf

2012-01-11 - DHCS - Proposed trailer bill - 620 Federally Qualified Health Center Payment Reform.pdf

2012-01-11 - DHCS - Proposed trailer bill - 622 CMAC Staff Transition.pdf