Budget makes huge investment in health care, and makes Prop. 56 payments permanent

July 20, 2021

On Thursday, July 15, 2021, the California Legislature passed the health omnibus trailer bill (AB 133), which finalizes components of the 2021-22 budget agreement with Governor Gavin Newsom. The bill, among other things, makes permanent the supplemental Medi-Cal reimbursements that apply to hundreds of primary care CPT codes and were scheduled to expire in July 2022. Making the reimbursements, which are funded by Proposition 56 (state tobacco tax) revenues, permanent will provide much-needed stability for Medi-Cal providers. The supplemental rates equal an increase of at least 40% over the base rates and, in some cases, reach 80% of the average commercial payment.

The COVID-19 pandemic has clearly highlighted the inequities rampant in California. Nowhere have these disparities been on greater display than in health care. From infection rates to access to testing and hospital beds, it is clear lower-income areas of the state lack sufficient access to health care. The California Medical Association (CMA) is pleased to see that this budget package makes progress towards reducing health disparities and increasing access to health care for many Californians who have previously struggled to receive adequate care.

The final budget agreement and the health omnibus trailer bill include many key CMA priorities including, but not limited to:

  • Extends for one year existing pandemic-related Medi-Cal flexibilities and payment parity for telehealth, including audio-only telehealth.
  • Eliminates the annual suspension of Proposition 56 funding, ensuring certainty of $1.2 billion annually to continue the supplemental Medi-Cal payments, thus increasing practice stability for Medi-Cal practitioners and access to care for Medi-Cal beneficiaries.
  • Extends full scope Medi-Cal to all eligible individuals 50 years of age and older, regardless of documentation status. Not only does this expand access to care, but it improves the state’s overall public health by ensuring that these individuals, previously without coverage, can now access preventative care.
  • Ensures continuous Medi-Cal coverage for children under age 5. Young beneficiaries of Medi-Cal often fall on and off Medi-Cal based upon various redetermination criteria, making it challenging for them to receive all the appropriate well-child visits and childhood vaccinations that are key to maintaining their health, and the public’s health, generally. This funding will ensure continuous access to care through these key childhood years.
  • Establishes permanent funding for optional Medi-Cal benefits, providing $120.3 million in total funds annually to ensure these services remain available for Medi-Cal beneficiaries.
  • Permanently extends post-partum Medi-Cal eligibility benefits for 12 months after delivery.
  • Removes the utilization of an “asset test” for Medi-Cal eligibility, utilizing an income-based model, instead. This will ensure that individuals who would otherwise be eligible for Medi-Cal, but who may, for example, need to own a car for transportation to work, or have other assets, are not denied access to health care.
  • Maintains the existing $40 million annual allocation for CalMedForce GME program.
  • Allocates $50 million, in one-time GME funding focused on new residency programs through the Song-Brown program.
  • Provides $12.9 million annually, ongoing to funds the UC Programs in Medical Education (UC PRIME) programs, which provide curriculum tailored to meet the needs of various underserved populations.
  • Recognizing the critical importance of ensuring that all physicians have access to a patient’s medical history at the point of care, requires the California Health and Human Services (CHHS) Agency to work with stakeholders to establish the CHHS Data Exchange Framework.
  • Provides $4 billion, one-time, to create comprehensive child and youth mental health programming and assistance through schools. This recognizes the impacts of COVID-19 on the mental health of Californians and funds efforts to combat this through both the health and education sectors.

The budget also includes major changes to the Medi-Cal program with the launch of the California Advancing and Innovating in Medi-Cal (CalAIM), which seeks to improve the quality of life and health outcomes of the state’s population by implementing broad delivery system, program and payment reforms across Medi-Cal. 

This is not the end of the 2021-22 budget process, however, as additional trailer bills—including details regarding the Office of Health Care Affordability (OHCA)—are still being contemplated for additional action when the Legislature returns from summer recess in August. The OHCA proposal includes major policy changes and has far-reaching implications for the health care delivery system. CMA continues to be an active voice at the table and will remain engaged in these ongoing discussions to ensure the interests of physicians and their patients are heard and considered as these negotiations continue.

For more information on the budget as it relates to health care, see CMA’s July 15, 2021, Budget Memo.


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