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.

The Ultimate Measure - CMA's 2014 Legislative Wrap Up

By Janus L. Norman, CMA Senior Vice President

For more than 150 years, the California Medical Association has upheld the banner for practicing physicians. Year after year, the state medical society has partnered with the local medical societies to diligently strive to ensure the care and well-being of patients and to protect public health by working for the betterment of the profession. In years of prosperity, the challenge of carrying out this duty is restrained. In years of controversy, the same duty is laborious. This year was full of controversies.

The fight to defend the Medical Injury Compensation Reform Act (MICRA) may have ended with a ballot box victory in November, but the threat of a statewide ballot measure loomed heavily from the onset of the 2014 Legislative Session. The leader of Senate, President Pro Tempore Darrell Steinberg, introduced Senate Bill 1429 as vehicle to execute the strong-arm strategy of the plaintiffs bar attorneys to eliminate MICRA’s cap on non-economic damages. Tremendous political pressure and immature bullying tactics were employed in an attempt to force CMA to the bargaining table, but the association held fast to its principle of working to create an economic environment that allows physicians in all specialties the ability to practice throughout California. Rejecting the false choices presented by opponents of MICRA and choosing to make our case before the people of California, CMA united its political allies to ensure Senate Bill 1429 never received a hearing, leaving the trial attorneys' Proposition 46 ballot measure the only available avenue for overturning MICRA.

Senator Mark DeSaulnier’s Senate Bill 1258 contained another component of Proposition 46: the requirement for Schedule V controlled substance prescriptions to be reported to the Controlled Substance Utilization, Review and Evaluation (CURES) database. The bill also would have required the electronic prescribing of controlled substances, expanded government access to CURES and dictated the quantity of controlled substances allowed to be prescribed. Like the mandatory checking of CURES inserted into Prop. 46, SB 1258 was touted as a bill to address prescription drug abuse. However, the impact would have been to legislate the practice of medicine, undermine the patient/physician relationship and reduce patient access to care. CMA was instrumental in killing the bill, which was held in the Senate Appropriations Committee. The committee's action prevented passage of bad policy and also extinguished Bob Pack’s ability to use the bill as a platform from which to campaign against CMA in the months leading up to the November vote on Prop. 46.

Senate Bill 492, authored by Senator Ed Hernandez, sought to expand to scope of practice of optometrists to include surgical procedures and primary care services. Senator Hernandez, a practicing optometrist and Chair of the powerful Senate Health Committee, worked feverously toward the passage of Senate Bill 492, which passed out of the Senate in 2013 and was resting in the Assembly. Utilizing his great influence and charm, Senator Hernandez, along with the Optometric Association, battled with CMA, the California Academy of Eye Physicians and Surgeons, the California Academy of Family Physicians and the California Society of Plastic Surgeons to win the votes of the members of State Assembly. Hundreds of CMA members made phone calls and wrote emails and letters outlining the flaws within Senate Bill 492 and urging legislators to vote no on the measure. As the coordinated statewide effort moved forward, members of the Assembly began to acknowledge the harm that would have resulted from irresponsibly expanding the scope of optometrists to perform surgeries and provide primary care services by publicly committing to stand with the physician community in opposition to Senate Bill 492. With a majority of the members poised to oppose the measure, Senator Hernandez and the optometrists agreed to drop the bill and allow it die quietly on the Assembly Floor.

California’s physician shortage is consistently utilized as an argument for expansion the scope of allied health professionals. To combat this argument and the increase access to quality care, CMA has prioritized improving our state’s physician workforce by increasing the number of residency slots for medical school graduates. Studies have indicated that where a physician completes his or her residency is a primary indicator of where the physician will practice. CMA pushed the state to make an initial investment in its future medical workforce. The 2014-15 Budget Act signed by Governor Brown included $7 million to support primary care residency slots through the state’s Song-Brown program. Of that $7 million, $4 million will be prioritized to residency programs that wish to expand and train additional residents in internal medicine, pediatrics, obstetrics-gynecology and family medicine.

The 2014-15 state budget also provided significant resources to physicians. Specifically, the budget includes $3.7 million to draw down $37.5 million in federal funds for technical assistance to Medi-Cal providers on implementing and achieving meaningful use of electronic health records (EHRs). The 10 percent contribution from the state will allow an additional estimated 7,500 Medi-Cal providers to participate in the Medi-Cal meaningful use incentive program and receive the necessary training from the existing technical assistance infrastructure. In addition, CMA convinced the Governor to forgive the retroactive Medi-Cal cuts contained in AB 97 (Chapter 3, Statutes of 2011), which reduced Medi-Cal provider cuts by 10 percent.

For the last several years, CMA led the effort to seek an injunction to invalidate and stop the implementation of the 10 percent Medi-Cal cuts, arguing that this reduction would threaten the ability of physicians to continue to treat Medi-Cal beneficiaries and would create significant gaps in access to care for this population. The legal process ran its course when the U.S. Supreme Court declined to hear our appeal. CMA was, however, able to convince Governor Brown to not attempt to retroactively collect the portion of the cuts during the period of time the injunction was in place. As a result, physicians will be able to retain $218 million in Medi-Cal payments.

During the last months of the 2014 legislative session, CMA learned of the imminent closure of Doctors Medical Center in Contra Costa County. Doctors Medical Center (DMC) is the area’s main medical facility, serving over 250,000 patients in west Contra Costa County, including the city of Richmond and surrounding areas. Even though over 80 percent of its patient population is insured through Medi-Cal or Medicare, low reimbursement rates prevent DMC from creating a business model that would allow for sustained financial viability. CMA sponsored Senate Bill 833 (Hancock) to appropriate $3 million from the Major Risk Medical Insurance Fund to DMC to provide bridge funding to secure additional avenues of finance and create a new and viable business model for the facility going forward.

CMA sponsored and strongly supported additional legislation that addresses the daily challenges faced by physicians and raised public awareness surrounding critical health care issues. Assembly Bill 1755, authored by Assembly Member Jimmy Gomez and co-sponsored by CMA and Planned Parenthood Affiliates of California, was signed by Governor Jerry Brown. The bill will improve California’s notice requirement specific to breaches of medical information in order to reduce administrative burdens on providers and health facilities, while also ensuring accurate notification to patients, thereby allowing health care providers to put those resources back into patient care.

CMA, joined by various patient advocacy groups, worked with the Legislature and Governor to secure the enactment of Senate Bill 964 (Hernandez), which required Medi-Cal managed plans and insurers offering individual plans through Covered California to provide annual reports to the California Department of Managed Health Care (DMHC) about the adequacy of their provider networks and to make the reports available online.

Our successful advocacy did not come without sacrifices. As CMA battled in the Assembly to defeat Senate Bill 492, Senator Hernandez, Chair of Senate Health, held two CMA sponsored bills hostage in the Senate: Assembly Bill 2400 (Ridley-Thomas), which reintroduced an important discussion in the Legislature about the contracting relationship between physicians and health care plans and health care insurers, and Assembly Bill 1771 (Pérez), which would have ensured physician reimbursement for non-face-to-face patient management services to help increase patient access to care. Ultimately, CMA stood strong in the midst of controversy and held to its core principle of ensuring the safety of patients, and as a result both measures were held in the Senate. However, CMA was able to convincingly make the policy argument for both measures and to secure bipartisan support for the underling policy, for which we will be advocating again in the near future.

In its first year, the “My CMA Idea” contest produced one of the most hotly debated topics of the year: the negative impact of sugary drinks. CMA co-sponsored SB 1000 (Monning), which would have required warning labels on sugary drinks. A strategy to help educate consumers about the risks associated with consuming sugary drinks, the bill was the first of its kind in the country. It generated unprecedented media attention, including coverage by international media outlets. Twenty-four California papers editorialized in support of the bill. Scholastic News magazine, a teaching tool distributed throughout the country, included stories on the bill in a way that encouraged classroom debate on the issue. SB 1000 was even referenced in the nationally syndicated cartoon strip “Drabble.”

SB 1000 faced a tough political environment from the outset, with the soda industry pulling out all the stops to defeat it. Though the bill died in the Assembly Health Committee, the campaign supporting the bill showed CMA’s strong commitment to reducing obesity, our willingness to pursue innovative public health policy and – most importantly – helped educate people about the risks associated with consuming sugary drinks.

As Martin Luther King, Jr. famously said, “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” In 2014, I am proud to say, CMA measured up!

For more details on the major bills that CMA followed this year, visit

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