Health Care Budget Bills

AB 85 (Committee on Budget) – Chaptered
Chapter 24, Statutes of 2013

AB 85 was passed as part of the 2013-14 State Budget Act in June and signed by the Governor on June 27. This measure contains all the major provisions related to county savings associated with the implementation of the Affordable Care Act (ACA). Major provisions include:

• County choice of a formula to determine savings by December 4, 2013, via board resolution. County can choose between 60/40 calculation of savings (60% of 1991 health realignment funds and 60% of maintenance of effort [MOE] related to health realignment). The measure includes caps for counties with high MOEs – 14.6% for non-hospital counties and 25.9% for hospital counties. The second option is a cost/revenue based formula detailed in Articles 12 and 13 of the measure.
• Includes provisions to assist county hospitals, including Medi-Cal assignment to plans and primary care providers and Medi-Cal rates.
• Creates a County Health Funding Resolution Committee, comprised of CSAC, Department of Health Care Services and Department of Finance, to hear: 1) cost/revenue formula disputes associated with the calculation of the historic percent of realignment spent on indigent care, 2) a county petition to change its selection of the 60/40 to the cost/revenue formula, and 3) a county petition to use an alternative cost calculation due to extraordinary circumstances related to the health care marketplace, provider or provider contracts.
• Specifies the $300 million withholding from the health realignment account in 2013-14 will be done via a schedule developed by DOF in consultation with CSAC.
• Includes a true-up process for the cost/revenue formula and the 60/40 formula.
• Includes language to allow any county with cash flow related to health programs to work with DOF and CSAC on implementing procedures to address these issues.
• Includes Legislative intent to review the formulas if the federal government enacts federal immigration reform. Also requires DHCS to provide the Legislature with a report on the impacts on county health expenditures to assist with its review.
• 1991 Realignment changes include:
• Health realignment savings will diverted to new accounts at the state level – the Child Poverty and Family Supplemental Support Subaccount and the Family Support Subaccount.
• At the local level, counties will create family support accounts.
• The health realignment savings will be used for CalWORKs grant increases. Counties will NOT have a new share of cost for CalWORKs grants. Whatever the revenues produce will be used to offset state General Fund costs for CalWORKs grants.
• Swaps Vehicle License Fees and Sales Tax funds between the Health Account and the Social Services Account. This transaction is intended to change the color of the funds, not the underlying formulas for disbursement of funds.
• Changes the disbursement of General Growth as follows: 1) the mental health calculation remains the same as in current law, 2) sets the health allocation to 18.4545 percent from an existing calculation, 3) eliminates general growth for the social services subaccount, and 4) allocates the rest of the general growth to the Child Poverty and Family Supplemental Support Subaccount.
• Provides that DOF, DHCS, Department of Social Services, the Controller, and CSAC will work together on technical implementation on the changes to 1991 realignment.

 SB 98 (Committee on Budget and Fiscal Review) – Request for Signature

Chaptered September 26, 2013

The Governor signed SB 98, by the Senate Committee on Budget and Fiscal Review, into law on Thursday, September 26. SB 98 is a technical cleanup measure related to AB 85, the budget trailer bill outlining the county health realignment “savings” framework under the Affordable Care Act (ACA), and it contained several key provisions for counties, including: 

Hard Cap on 2013-14 Contribution.  SB 98 includes a “hard cap” on the $300 million in 1991 health realignment payments that counties will make to the state in the first six months of 2014. Under AB 85, a county that elected to determine savings related to indigent health care through the cost/revenue formula option might have had to pay more than their proportional share of the $300 million under the “true up” mechanism. SB 98 clarifies this provision, ensuring that counties that choose the formula option will pay no more than their original proportional share of the $300 million.
Deadline Extensions. SB 98 extends key deadlines for counties and the state, which will ensure the accuracy of the data processes outlined in AB 85. Many of the deadlines have been moved back at least 30 days, including the date by which a county must formally choose either the 60/40 split or cost/revenue formula route from December 4, 2013 to January 22, 2014. The table below illustrates the date changes that are now expected to become law: