Final budget agreement provides over $1 billion to improve Medi-Cal provider payments

June 16, 2017
Area(s) of Interest: Access to Care Advocacy 

Last November, the California Medical Association (CMA) took on Big Tobacco to improve access throughout the Medi-Cal program. California voters overwhelmingly approved Proposition 56, which added a $2 tax on tobacco products and stipulated that funds should increase access by improving provider payments.

In January, the Governor’s budget redirected all tobacco tax revenues to support the state’s General Fund obligations. In May, he doubled down on his proposal, offering no additional funding to improve provider payments. 

Restoring Prop 56 funds was CMA’s #1 budget priority, and we engaged the legislature through earned media, digital advertising, grassroots outreach and direct advocacy. 

The legislature heeded CMA’s leadership and efforts – both houses rejected the Governor’s proposal and laid out a different framework for appropriating tobacco tax revenues into the final budget. 

And yesterday, the Senate and Assembly approved the state budget, which includes a Prop 56 appropriation bill that provides over $1 billion ($546 million in state funds plus a federal match) for the 2017-2018 fiscal year to improve provider payments.  

Specifically, the budget and Prop 56 appropriation bill provide:

  • $650 million for supplemental payments for physicians ($325 million in state funds plus a federal match). The legislative intent is for the rate increase to apply to physicians who participate in Medi-Cal fee-for-service or managed care.
  • $100 million for women’s health services ($50 million in state funds plus a federal match) and $8 million for HIV/AIDS waiver provider payments ($4 million in state funds plus a federal match). Physicians qualify for these supplemental payments if they provide such services.
  • $54 million for supplemental payments for Intermediate Care Facilities for the developmentally disabled ($27 million in state funds plus a federal match).
  • $280 million for supplemental payments for dentists ($140 million in state funds plus a federal match).
  • $33 million in graduate medical education funding reallocated to the Song-Brown Program.

In addition, the appropriation bill includes a mechanism to increase the supplemental payments for physicians and dentists to $800 million depending on the state's fiscal condition, which would increase the allocation for physicians from $650 million to over $1 billion ($559.5 million in state funds plus a federal match). 

While the budget does not appropriate all tobacco tax revenues to improve provider payments as required by Prop 56, it explicitly sets aside millions to improve physician payments. The initiative required the state to improve payments to providers without specifying how to divide the revenues. 

Questions remain about how the remainder of tobacco tax revenues will be invested – but yesterday's vote provides certainty that physicians will, at minimum, receive $650 million in the 2017-2018 fiscal year, $108 million for women's health and AIDS/HIV services, and 70 percent of future supplemental provider payments. 

Other key details include:

  • The appropriation bill directs the Department of Health Care Services to develop and post on its website by July 31, 2017, a proposal on the structure for provider payments.
  • Consistent with federal law, the state will have to seek State Plan Amendments (SPA) to implement the increased payments. The SPA approval process normally takes a minimum of three months; money cannot be disbursed until the SPA is approved. The legislative intent is that physicians will be allowed to retroactively bill eligible claims made after July 1.

CMA remains committed to ensuring that the state honors the will of Prop 56 voters, and we will continue to monitor and engage during implementation. The dialogue is ongoing, and additional details will be shared with members as they become verified. 

Questions regarding our legal strategy should be directed to Francisco J. Silva, General Counsel and Senior Vice President, at fsilva@cmadocs.org

As always, media inquiries must be coordinated through Charles Lawlor, Associate Director of Communications, at communications@cmadocs.org.

Thanks to our member physicians for your tireless advocacy on behalf of California’s most vulnerable patients!


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