Special session on Medi-Cal financing underway in the Capitol

July 07, 2015
Area(s) of Interest: Access to Care Advocacy 

In June, Gov. Jerry Brown convened a special legislative session on "health care financing." Specifically, legislators will be working to come up with new funding for developmental disability services, in-home supportive services and the Medi-Cal program, which is facing a shortfall of at least $1.1 billion through the loss of the managed care organization (MCO) tax.

Since 2005, the state has taxed MCOs and used the money to cover the costs of provider reimbursement. However, last summer federal officials informed California that its MCO tax structure was not compliant with new federal requirements. The loss of the MCO tax and the federal matching funds would mean the loss of over $2 billion for the Medi-Cal program.


The budget that Brown introduced in January proposed a new MCO tax that would conform to the new federal requirements, but health plans objected to the new tax and the legislature failed to adopt the proposal.


The special session will look at sources of funding, from another MCO tax to alternative sources. Legislators will also tackle other issues, including:


  • How to restore cuts made to Medi-Cal provider reimbursement rates.
  • How to finance the Medi-Cal program when the state must begin paying in 2017 for 10 percent of Medi-Cal enrollees who are “newly eligible” under the Affordable Care Act.
  • How to pay for a court-ordered restoration of a 7 percent cut in In-Home Supportive Service rates.


The special sessions began in June with informational hearings, but the hard work isn’t expected to begin until late August after the summer recess. The California Medical Association (CMA) continues to work with its legislative allies and coalitions to push the issue of reimbursement rates and patient access over the finish line.

Medi-Cal currently covers just under one-third of the population of the state of California— about 12.3 million people. Since cuts were made to Medi-Cal in 2011, California has ranked among the bottom three states in the nation for Medicaid reimbursements. Low reimbursement rates have forced many of California’s providers to stop seeing Medi-Cal patients. As a result, more than half of Medi-Cal patients report difficulty finding a doctor. CMA is committed to ensuring that Medi-Cal is not a broken promise of access to care for millions of Californians.



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