California recently adopted a $310 billion 2023-24 state budget, and despite a $31.5 billion shortfall, leaders prioritized investments in health care. Major healthcare investments include CalAIM and updated managed care organization (MCO) taxes.
This budget includes a total of $156.6 billion to support the Department of Health Services (DHCS). Of this total, $1.3 billion will go to state operating funds and $155.3 billion will go to local support, including funding program costs. DHCS will increase by $11.8 billion compared to last year’s budget fund of $144.8 billion.
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budget is updated MCO taxThis will allow California to receive federal matching funds to support Medi-Cal programs. His MCO tax, which is awaiting federal approval, is estimated to result in a net state benefit of about $19.4 billion by 2026, with about $8.3 billion going toward existing Medi-Cal spending over that net benefit period. The remaining $11.1 billion will go toward new Medi-Cal investments.
Under the MCO tax, rates for primary care, including nurses and physician assistants, maternity care, including obstetricians and doulas, and non-specialized mental health services will increase to at least 87.5 percent of Medicare starting January 1, 2024. This tax is three times larger than in previous years and will focus on strengthening other areas of the Medi-Cal program rather than simply offsetting Medi-Cal spending.
Donald Hernandez, president of the California Medical Association, said: recently complimented MCO tax update.
“With the passage of this measure, and the agreement to invest new revenues into our health care system, California will be able to train hundreds of additional doctors each year and ensure we can open emergency departments in times of crisis to meet future demand. These MCO taxes will help our state take a significant step forward in fulfilling Medi-Cal’s promise to provide quality, timely care to its most vulnerable patients.”
— Hernandez
California will also require providers to pay at least a basic service fee for Medi-Cal administered care plans. MCO tax revenues, combined with funding from the Department of Health Access and Information, will release $150 million for the Needy Hospital Loan Program and $50 million for the Small and Rural Hospital Relief Program.
The budget also provides $75 million in fiscal 2023-24, with additional funding for the next few years, for graduate medical education through the University of California. issued a statement Regarding the June budget.
“The funding provided will allow the University to continue expanding opportunities for more California students to attend the University of California, while ensuring that the campus makes the necessary investments to support its growth. In addition to hiring more faculty and academic support staff, this stable funding will provide each location with more resources for long-term projects that expand student resources on campus.”
— University of California
While much excitement envelops the surroundings, MCO tax update, this budget will also bring many changes to the CalAIM program. DHCS plans to submit a 1115 Demonstration Waiver Application no later than this fall to expand its network of behavioral health community-based equitable care and treatment organizations known as Behavioral Health Services for Medi-Cal Members Living with Severe Mental Illness or Serious Emotional Disorder (BH-CONNECT) Demonstration.
Although this demonstration has not yet been submitted or approved by the Centers for Medicare and Medicaid Services, California hopes to have BH-CONNECT in place by January 1, 2025. Over five years, the cost is estimated at $6.1 billion, of which $306.2 million will come from the General Fund.
If approved, BH-CONNECT would represent a targeted long-term and short-term investment for a diverse range of behavioral health professionals, costing $480 million annually over a five-year demonstration period.
As part of the BH-CONNECT demonstration, the budget includes provisional rent services and is seeking amendments to the CalAIM exemption to allow provisional rent services to be included as community support.
Transitional rental services allow up to six months of rental or temporary housing for eligible individuals who are homeless or at risk of losing their home, who are transitioning from facility-level care, correctional facilities, or foster care, and who are also at risk of other Medicaid planning services, such as hospitalization or emergency department visits. Financial impact on this service is expected to begin during fiscal year 2024-25.
California became the first state in the United States to allow people of justice To get Medi-Cal coverage. Those who have been incarcerated are more likely than those who have never been incarcerated to undergo physical and behavioral health examinations, and have higher rates of overdose, trauma, violence and suicide.
Earlier this year, DHCS conducted a pre-release Medi-Cal eligibility and registration process for up to 90 days prior to release from juvenile and adult state prisons, county prisons, and juvenile correctional facilities. The budget includes $9.9 million for FY2023-24 (including $3.8 million from the General Fund) to implement the Justice Engagement Initiative and Pre-Release Services, with an additional $225 million to be provided through the Provision of Access and Health Transformation (PATH) initiative.
Funding for this justice-involved effort will, in part, support collaboration between correctional facilities and county social services departments on planning and implementing the pre-release Medi-Cal registration process.
PATH will also receive an additional $40 million from the General Fund to support health care providers who help deploy and build CalAIM’s community support and enhanced care management services in clinics.
Another initiative within the budget relates to expanding Medi-Cal services, including home assistance services for illegal immigrants living in the state. Effective January 1, 2024, income eligible adults between the ages of 26 and 49 can apply for the full range of Medi-Cal benefits and services, regardless of immigration status.
The budget allocated $1.4 billion (of which $1.2 billion from the General Fund) for 2023-24, and $3.4 billion (of which $3.1 billion from the General Fund) upon full implementation.
