Wednesday, January 16, 2019

California State Budget Update

Today, the Governor and legislative leaders announced an agreement on the 2015-16 State Budget Act and have settled the major issues and spending priority differences between the administration and the Legislative branch. A few key points and dollar amounts for the budget year include:

  •   $40 million to expand Medi-Cal to cover all low-income undocumented children effective May 1, 2016 ($132 million when fully implemented)
  • $265 million to fund 7,000 additional preschool slots and 6,800 child care slots, plus a rate increase for all providers.
  • $97 million over the January budget for the California State University to expand enrollment and focus on increased success.
  • $226 million on a one-time basis to restore the 7 percent reduction in service hours for In-Home Supportive Services.
The budget bills that will be voted on over the next several days will not contain an increase to Medi-Cal Provider Reimbursement rates. In a typical year, the conclusion of budget negotiations would mean the end of our hopes of improving access for over 12 million Californians who rely on the Medi-Cal program for the next 12 months.

However, the Governor made an additional important announcement this afternoon – he is calling a Special Session of the Legislature to address “Health Care Financing,” i.e. the Medi-Cal program. He specifically called for the need to address the budget hole created by the failure to pass a new managed care organization (MCO) tax and called on the Legislature to enact a permanent and sustainable funding source to fund “additional rate increases for providers of Medi-Cal and developmental disability services.” If you recall, since 2005, the state has had some form of a tax on managed care plans used to fund payments to Medi-Cal providers and reduce the state’s general fund exposure while drawing down federal matching funds. However, recently the federal government found California’s MCO tax structure fails to comply with new federal requirements that such a tax be broad-based and not limited narrowly to Medicaid plans. In his January budget, the Governor proposed a new MCO tax that conforms with the new federal requirements, however the Legislature did not adopt the proposal largely due to objections from health plans. In response, the Governor is proposing that the Legislature enact permanent and sustainable funding to provide at least $1.1 billion annually to the Medi-Cal program. His announcement states the funding could come from an MCO tax and/or alternative sources in the special session, such as a tax on tobacco products.

While the failure to address provider rates in the state budget is regrettable, the special session of the Legislature provides a new opportunity for RCMA/CMA and other stakeholders to push through a permanent and significant funding increase dedicated almost exclusively to providers of health care services and ensure the health care infrastructure exists to care for the Medi-Cal population. The Governor’s special session announcement was made on the same day, perhaps coincidentally, that the State Auditor released a report finding Medi-Cal managed care provider networks are severely lacking integrity and are resulting in barriers to accessing care. The State Auditor found that not only were managed care plans providing the state with inaccurate data on availability and participation of in-network physicians, it found the state was not verifying whether the data from the plans was accurate, and thus could not reliably determine whether the Medi-Cal networks meet California’s stringent network adequacy standards. A summary of the audit’s findings can be found at this link here.

The announcement of the special session allows the Governor and legislative leaders to bypass the traditional legislative and budgetary calendar. RCMA/CMA continues to work with its legislative allies and coalitions to push this issue over the finish line.

Medicare Eligible Professionals: Take Action by July 1 to Avoid 2016 Medicare Payment Adjustment

Payment adjustments for eligible professionals that did not successfully participate in the Medicare EHR Incentive Program in 2014 will begin on January 1, 2016. Medicare eligible professionals can avoid the 2016 payment adjustment by taking action by July 1 and applying for a 2016 hardship exception.

The hardship exception applications and instructions for an individual and for multiple Medicare eligible professionals are available on the EHR Incentive Programs website, and outline the specific types of circumstances that CMS considers to be barriers to achieving meaningful use, and how to apply.

To file a hardship exception, you must:

  • Show proof of a circumstance beyond your control.
  • Explicitly outline how the circumstance significantly impaired your ability to meet meaningful use.

Supporting documentation must also be provided for certain hardship exception categories. CMS will review applications to determine whether or not a hardship exception should be granted.

You do not need to submit a hardship application if you:

  • are a newly practicing eligible professional
  • are hospital-based: a provider is considered hospital-based if he or she provides more than 90% of their covered professional services in either an inpatient (Place of Service 21) or emergency department (Place of Service 23), and certain observation services using Place of Service 22; or
  • Eligible professionals with certain PECOS specialties (05-Anesthesiology, 22-Pathology, 30-Diagnostic Radiology, 36-Nuclear Medicine, 94-Interventional Radiology)

CMS will use Medicare data to determine your eligibility to be automatically granted a hardship exception.

Apply by July 1
As a reminder, the application must be submitted electronically or postmarked no later than 11:59 p.m. ET on July 1, 2015 to be considered.

If approved, the exception is valid for the 2016 payment adjustment only. If you intend to claim a hardship exception for a subsequent payment adjustment year, a new application must be submitted for the appropriate year.

In addition, providers who are not considered eligible professionals under the Medicare program are not subject to payment adjustments and do not need to submit an application. Those types of providers include:

  • Medicaid only
  • No claims to Medicare
  • Hospital-based
Want more information about the EHR Incentive Programs?
Visit the EHR Incentive Programs website for the latest news and updates on the programs.

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