February 26, 2016

Does that headline sound familiar? It should, since that is what we have been saying and publishing about the Governor’s proposed Managed Care Organization (MCO) fix since mid-January. However, there has been measurable and visible progress on the Governor’s proposal, and both houses are slated to vote on the package on Monday.

The main piece of the package – the MCO fix as outlined in SBX2 2 (Hernandez-Bonta) – is supported by CSAC.

SBX2 2 is the product of months of negotiations between the Brown Administration, health plans — including local and county-run health plans — and the Legislature to restructure the MCO tax in a way that meets federal standards. It also preserves more than $1 billion in critical funding for Medi-Cal services throughout the state.

Counties are key stakeholders in the MCO fix conversation, and are affected in several key ways.

On a statewide level, the existing MCO tax provides implementation funding for the Coordinated Care Initiative (CCI) pilot program in seven counties, with plans to expand to all 58 in the future. Counties strongly support the CCI to ensure better care coordination for high-risk, high-cost residents who are dually eligible for both Medicare and Medicaid. The CCI also affects the counties’ role in the In-Home Supportive Services (IHSS) program, as it is tied to the county IHSS Maintenance of Effort (MOE) and the eventual plan to transition collective bargaining for IHSS workers from each county to the state. If the current MCO funding for the CCI is not continued, it could jeopardize the county IHSS MOE and eventual transfer of collective bargaining.

The current MCO tax also provides funding for other Medi-Cal services throughout the state. The loss of this supplemental funding could result in statewide cuts to the Medi-Cal system or county programs and services.

On a county-by-county basis, the tax structure proposed in SBX2 2 will impact counties that operate local health plans, since county health plans will not benefit from changes in the Corporate or Gross Premium Tax structures under SBX2 2. Further, counties that provide local health plan coverage to county employees will experience new fiscal impacts under SBX2 2. The net impact of SBX2 2 on each county will vary, but it is clear that counties will bear a larger proportion of the new MCO fix upon its passage. 

However, due to the other circumstances mentioned above, CSAC supports SBX2 2 as reasonable MCO fix that meets federal requirements and preserves critical Medi-Cal funding, including the CCI. SBX2 2 achieves both of these goals.  

The second piece of the MCO fix package is ABX2 1 (Thurmond-Beall), which would provide a $300 million investment in the community-based developmental services system and forgive retroactive payments for rural and critical access skilled nursing facilities that are associated with general acute care hospitals. Developmental services providers will see a 5 percent increase in rates and the state will complete a rate study to further address historically low reimbursement rates for these providers. CSAC has not taken a position on ABX2 1, since the developmental services system is operated by the state, but the Association has strongly supported relieving rural and critical access skilled nursing facilities of a budget cut that would have required them to repay payments made before 2009. If these small facilities had been required to make those payments, it would have jeopardized their continues operation in areas where this type of care is already rare and hard to access.

The third part of the package is outside of the Special Extraordinary Session on Health Care, and is instead part of the budget: AB 133. It would appropriate about $500 million for the following:

• $173 million for specified local Traffic Congestion Relief projects ($148 million); trade corridor improvements ($11 million);  Transit and Intercity Rail Capital  Program ($9 million); and the State Highway Operations and Protection Program ($5 million).
• $105 million to support fire recovery and debris removal for Lake and  Calaveras counties.
• $240 million towards existing liabilities to prefund health and dental benefits for state retirees.
• $1.85 million to the University of California for the San Joaquin Valley Program in Medical Education (SJV PRIME) program, which provides training to medical students within San Joaquin valley clinics.

The budget committees of both houses approved AB 133 on Tuesday and it is currently on the Senate Floor.

Fingers are crossed that Monday will finally be the day for a resolution to the MCO fix issue. CSAC will keep counties updated as the vote (hopefully) progresses.