Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services
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Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services California State Senate
Follow its sittingsSpeaker 1
And I've been hearing from stakeholders that the average is bringing back to the rates to the early 1990s. I don't know if that's the perspective, the view of the department as well. And does the department believe that the program can function with these kind of rates?
Speaker 3
So these were implemented to address the budget challenges as part of the 2025 Budget Act. And so these were supplemental payments that were first supported by the tobacco tax. And as those revenues have gone down, we're backfilled by general funds. So as a means to balance the state budget last year, this was implemented. Sure.
But do you think they can function with the reduction? That's what we will learn as part of this access study.
Speaker 1
So do we have any assumptions on what we expect We do not. To And do you think this aligns with or does it undermine our efforts? I know there's been an effort to increase dental utilization. Does this undermine our efforts?
Speaker 3
You know, data does show that increased rates does often lead to increased provider participation. We don't have any specific data points on this. And I know the California Dental Association has done a survey, but the administration has not completed any survey in regard.
Speaker 1
I'm wondering if there's any perspective from the LAO in the impacts for dental utilizations. I can't remember if you've produced a report on this.
Speaker 4
Jason Constantaro, Celio. I'm not aware of a report we've done specifically in the dental area, but the questions you raise are really the key questions before the legislature. The legislature took many of these budget solutions to help sort of control spending growth in Medi Cal and also address sort of the state's fiscal challenging fiscal situation. And so, this is an area where the legislature would sort of like to revisit it, it does sort of, raise the trade off of what else needs to happen in the state budget to sort of balance the budget and address the long term deficit. But I'm not aware of any specific dental report.
Speaker 3
They are just information to providers about this change that would go into effect. So it's really kind of the education about the changes that are coming starting 07/01/2026.
Speaker 1
And I'm sorry if I missed this. Has there been communication with CMS on this rate reduction?
Speaker 3
Not yet. We would be required to submit the public notice by the end of the fiscal year and then the final SPA and kind of the rate access by the end the last day of the quarter in which the change goes into effect. And do we report do we submit a report to CMS on We will be required to submit a rate reduction and restructuring analysis, yes. Is that where you put together
Speaker 1
you mentioned in conversations with stakeholders, are you putting that together with
Speaker 3
the stakeholders? It would include public feedback, a review of the feedback that we've received, historical trends, provider participation rates, and service utilization. So this is what we have to submit to CMS as part of the approval to eliminate the supplemental payment.
Speaker 3
Or it gets submitted, and then the public gets to review it? I believe we take in the public feedback and include it as part of the report. But in terms of reviewing the public report, I would defer. I don't believe so.
Speaker 5
No, that's accurate. And then providers also have an opportunity to submit comments to CMS directly as well after it is publicly available.
Speaker 1
So the legislature won't be made aware of this analysis until after it's been submitted to CMS?
Speaker 3
I mean, we are happy to provide it earlier. I just don't have a date for when we will have this done. Okay. Yeah.
Speaker 3
Issue two is the November 2025 Medi Cal local assistance estimate, and we'll provide an overview of the significant general fund changes in the Medi Cal program from the current year and the budget year. The November 2025 Medi Cal estimate projects a funding of $196,700,000,000 total funds, dollars 46,400,000,000.0 general fund in the current year, and $222,400,000,000 total funds and $48,800,000,000 general fund in the budget year. Year over year spending grows about $25,000,000,000 between the two fiscal years. Key changes in our current year numbers include changes related to the managed care organization tax, and I know that's another item in today's agenda, given the reduction in the kind of what we can assume for managed care tax effective 01/01/2027 Medicare cost growth, including ongoing growth in just the Medicare population and the higher premiums that we pay for that population, that's about $640,000,000 State only claiming adjustments, we've made additional adjustments related to our state only claiming for members with unsatisfactory immigration status, and this includes about $819,000,000 general fund higher benefit deferrals from the federal centers for Medicare and Medicaid services and some additional quarters from the state administrative deferrals and then changes related to our 2025 budget solutions, a change in the timing of the pharmacy rebate aggregator collection.
We spoke about this last hearing, just the timing of only being able to score one quarter's worth of savings. And then in terms of offsetting savings, so changes where we actually have less general fund spend, we have lower utilization of fee for service pharmacy benefits and inpatient services, and then some changes in our managed care. Compared to the current year, compared to the budget year, again, some of the changes in that space relate to our managed care tax. Managed care base rate growth, increases both in enrollment and, just the rate increases, base managed care rates, 2,700,000,000.0 general fund, the changes that we've discussed related to HR1, the federal policies related to the change in the, unsatisfactory immigration FMAP percentage that we can claim and some of the changes related to the work and community engagement requirements and the semiannual redeterminations increases in the rate of fee for service pharmacy spend, the cost per claim amount of about $900,000,000 general fund, and then, again, also increases in our Medicare cost growth, the higher premiums in the higher populations. As I mentioned, we do anticipate reduction in caseload from current year to budget year to reflect the full implementation of kind of the normal operations with no longer having the federal flexibilities related to the public health emergency, the asset limit reinstatement, and, again, the enrollment freeze.
Those are the key significant changes related to the Medi Cal estimate. And happy to answer any questions.
Speaker 1
So while we've seen a very tiny decrease, it sits around the 2% decrease from the assumptions of the previous Medi Cal cases, We're seeing an increase with other variables. Our costs are increasing even though we're seeing a tiny so it's safe to say, while the caseload is decreasing, the funding for Medi Cal is increasing because of other variables. So we could continue to kick people off, but the cost is going to continue to go up
Speaker 3
because all these other things are impacting. I would just say, generally, the cost of health care is growing, and Medi Cal is not immune to that. So a lot of these costs reflect those just general increases in health care costs, some of the Medicare, the cost premiums that go up as a result, and our managed care base rate increases similarly just to reflect the base cost of health care in California and nationwide.
Speaker 1
And while, like I mentioned, the decrease right now sits at like 2.1%, 2.4%. Is that a normal decrease in case, though, that trend that we see? Or is there something acute? Is it starting to see a trend of what we've done? And that's why we're seeing
Speaker 3
the decrease. So I will say up until the last year or so, the Medi Cal trend was going up, particularly when we held enrollment and weren't doing the redeterminations. And so, we had a peak of over 15,000,000 enrolled in Medi Cal as we were not processing redetermination. So, individuals maintained eligibility for close to three years. So, we were, you know, before the pandemic, we were probably close to can find it right here.
We were closer to about 13,000,000 enrolled in Medi Cal. And then, we've grown since then in reflecting a height of about 15,300,000 in 'twenty two, 'twenty three, and 'twenty three, 'twenty four, and then have started to go down starting in 'twenty four, 'twenty five, reflecting no longer having the freeze in redeterminations and then the various changes in expansions.
Speaker 1
Okay. So this is what we're this is now we're starting to officially see the impacts of all of those stuff. Correct. And then I had a question on the net savings part on the $50,000,000 general fund savings for utilization management for hospice benefits.
Speaker 3
If you could explain what that is. Sure. So that was part of a trailer bill that we implemented in the 2025 Budget Act. Prior to the trailer bill, the state and managed care plans were prohibited from doing any type of utilization management or prior authorization, so any kind of parameters by which to approve or not approve hospice care. And as a result of this new trailer bill language that goes into effect 07/01/2026, anticipated cost savings based on potentially abuse of these services or just kind of inappropriate use of hospice services as managed care plans, and the state can provide some more utilization management parameters for these services.
Speaker 1
Okay. I'm going go back a little bit to the dental conversations that we're having, just because we're still in the Medi Cal space. I know that you've mentioned you're doing
Speaker 3
you're getting the feedback and all that. But is there anything else the department outside of having those conversations with providers and analysis of the actual impact this is gonna have on the overall Medi Cal program and just the impact on maybe clinics, ERs, and so forth if people are going for emergency care? So emergency services dental emergency services would still be covered under emergency services. So those would still be covered if an individual shows up at an ER for something related to dental procedures. So those are still covered.
Okay.
Speaker 1
Do we anticipate providers leaving? Has there been a history that shows that, yes, providers will leave? Can we turn to something that has happened before and we anticipate we'll do it?
Speaker 3
I know when dental, the dental benefit was eliminated back in the so that was a different process. And I don't think we have any data to show, as rates have been cut or rates are cut, the impact on provider participation in any history that I've seen. Jason?
Speaker 4
So we did look at some of this a little bit in a handout we did one or two years ago. It wasn't for dental specifically. We looked at physician rates, but the conversation sort of broadly translates across provider groups. And, you know, changes in rates do sort of affect do have a correlation with access to care. And, you know, the primary mechanism is provider participation.
But there really are two parts to provider participation. There's how many providers are in the network, and then of those providers that are participating, how many are prioritizing care for beneficiaries. And my memory is going off of memory, so it's always a little risky, but my memory is that it was that latter effect that really where the rates had a big difference was less so on the provider participation in network, but in terms of overall utilization of services. And so, in rates tend to be associated with higher utilization of services.
Speaker 4
That can be an effect, too, but we my memory is that we found a research tended to find a bigger effect on overall utilization.
Speaker 3
Okay. Issue number three is the November 2025 Family Health Local Assistance Estimate. The family health programs include the California Children's Services Program, or CCS the Genetically Handicapped Persons Program, CHPP, and the Every One Woman Counts. And these programs serve medically frail children and adults not eligible for Medi Cal with highly specialized, and high cost conditions. In terms of the overall fiscal, projections, the family health, so all of these programs in total.
In the current year, we anticipate 292,800,000.0 total funds, $2.64 of that in general fund. And then, the budget year, $3.00 7,000,000 total funds with about $280,000,000 general fund. The key changes from our last year's estimate includes an increase of $16,500,000 general fund related to just higher expenditures in the CCS and the GHPP program, driven mostly by updated utilization data and underlying medical cost trends. Especially just for context, the GHPP program, the average annual cost per case is 350,000 Both our GHPP and CCS programs are experiencing increased expenditures due to growth in pharmacy costs for the GHPP program, and both growth in cost and higher cost per member, and then growth in the CCS therapy costs. All these programs do show slight reductions in caseload, but kind of to the point that you raised earlier, the general fund spending continues to grow upwards, just given the cost per case and the increased costs in pharmacy and just medical services.
Happy to answer any questions.
Speaker 1
Do you have anything? Okay. Yeah, have a couple of questions on the CCS program. I know we've talked I think a couple of years ago, we've talked about making the the website a little bit more user friendly. And, you know, I've I've visited recently.
I have a couple constituents that, you know, they're they're doing their due diligence and continuing to reach out to my office regarding, you know, they had the unfortunate situation with their daughter, and they were participants of this case. But it's still it's not super user friendly in being able to apply for this benefit. You have to submit through your local social worker, and you contact them. I'm still wondering if I'm still hoping that we can still look at that website to make it a little bit user friendly so that people can benefit from from this program. So I'd love if we can get a follow-up on just elements that we can implement, Shutter, to improve accessibility.
And then, also, there was a bill that passed, AB eight forty seven, the SOPHIEZ Act, that was looking to address a potential funding gap. And I'd love it, director, if you can help me, because is it safe to assume once you age out of the CCS, you go
Speaker 1
So you can't just transition. So once you hit once you're 22, there's no available services for you.
Speaker 3
Unless you're in medical, CCS medical, then you continue in Medi Cal for adults, I guess
Speaker 1
So what happens once you're 22 and you're not eligible for Medi Cal and you can't afford these services? Like, do real life scenarios there look like? What are options?
Speaker 1
Okay. So someone's been on CCS, like, a majority of their life, once they're 22, services stop?
Speaker 3
I think it just depends on the services we're because talking they may be still qualified for regional center services. Think it just it may be dependent on the types of services. So, potentially, they may continue on a potential waiver program. It's hard to speak globally. Yeah.
Jason?
Speaker 4
Sorry about that. I just wanted to emphasize that in the CCS program, you know, about 90% of beneficiaries are on Medi Cal, too. And so, you know, income thresholds for Medi Cal are higher for kids than they are for adults. So some people, when they become adults, they lose Medi Cal coverage. But for those who stay in the Medi Cal program, they still have access to those services through Medi Cal.
So, it is the people who are affected are those who don't have sort of Medi Cal coverage. But it's most of the people in CCS have Medi Cal coverage.
Speaker 1
Okay. And then I've been hearing also from county specific that the funding doesn't align to the caseload of CCS. I don't know if you've heard any feedback from counties on that, if you could share a little bit more on that.
Speaker 3
No, there have been ongoing discussions related to county, particularly the public departments, the local health jurisdictions, the funding levels, and are they appropriate to support the work associated with CCS. This has been a topic for many years.
Speaker 3
Or what is that? Understanding is about a $100,000,000 request. I would defer to the counties, but I think it's a that's about the range.
Speaker 1
Because of that, are they sharing that there's an impact? And I guess it's a long list, a long waiting list
Speaker 3
I mean, difficult to maintain kind of the timelines, the number of staffing that are required to serve this population and the families. It's challenging for the counties.
Speaker 3
Oh, it's decreased. The trends right now are that the CCS population is decreasing. But over time, I think, you know, these things become more expensive, and the budget may not have adjusted appropriately.
Speaker 1
make the list of the possibility of getting funded a little bit more? Is it all you know, if
Speaker 3
I will say, earlier this year, we did clarify in guidance that the CCS, we There was a maintenance and operation kind of MNO funding that was really supposed to be available for kind of the revised or kind of amplified M and O activities that were new over the last couple of years, we have clarified that those dollars can be used kind of for a broader purpose to address kind of the concerns that we've heard. Recognize it's not complete.
Speaker 4
Just to shed a little more perspective on this. We've heard from counties year after year about concerns around how they're funded for county admin. Does seem to come down a lot to different views and how the methodology should work. I think counties could speak better to their perspective. But I did want to emphasize that this year you are going to hear a lot from counties on a variety of cost pressures.
You've probably already had hearings, we've heard this. And, you know, they'll range from, you know, workload requirements to implement HR1 eligibility changes and cost pressure to indigent care programs. And the legislature may not have sort of enough budget capacity to fully meet all these issues. So, there could be an issue of prioritizing. There is sort of a key fiscal consideration with county admin for implementing HR1 eligibility if we don't reduce the error rate for CallFresh and HR1.
Could be subject to penalties with so there is there is sort of a key fiscal consideration there as well. But there might need to be there might you might face some prioritization issues in terms of accounting for all of these cost pressures.
Speaker 1
Great. And there's a couple PCPs on being able to address that. Okay. And then on the Woman Counts program, we've made great strides to decrease the caseload in this. Are we worried, given all the changes to Medi Cal, that now we're going to have more people utilizing the Every Woman Counts program and that it's going to increase our
Speaker 3
That is definitely a possibility. And Every Woman Counts has a higher federal poverty limit threshold. And so it is definitely something that we will be thinking through with implementation of HR1 and some of the other changes in the medical space.
Speaker 1
Is this something that, regardless of how many people are in the program, the general fund will cover those cases?
Speaker 3
There's proposition $99 breast cancer control account and CDC grants that are all part of the funding situation. But it is also general fund is also used in this space as well. I don't have this funding split in front of me, but yeah.
Speaker 1
And is it a requirement that regardless of how many people are in the program, we have to fund it? Or is this something that I'm not saying the department is looking to cut, but is eligible for cuts down the line.
Speaker 3
In the past, I would say, believe this long ago passed, that this was one of the areas that was often explored in terms of how to address the program funding for this compared to the other changes being considered.
Speaker 1
Okay. Anything else to add, Jason, on this issue? Okay. Moving on to issue number four.
Speaker 5
Right. Good afternoon, Chair. I'm Tyler Sadwitz, your Medicaid director. So I'd like to provide a little bit of information about provider taxes or health care related taxes and the way they're used in Medi Cal, the impacts of HR1 on these taxes, and how Prop 35 directs the MCO tax specifically. So, there are a few taxes that support Medi Cal today.
The MCO tax, the hospital quality assurance fee, or HQAF, and then several smaller quality assurance fees for skilled nursing facilities, intermediate care facilities, and ground emergency medical transportation. Prop 35 directs the MCO tax to support, in calendar year 2025 and in calendar year 2026, a variety of different clinical domains as specified amounts. For general support of the Medi Cal program, the amount is $2,000,000,000 For primary care, the amount is $691,000,000 For specialty care, it's $575,000,000 For emergency department facilities and ED physicians, the amount is $355,000,000 For community and outpatient care, it's $245,000,000 For reproductive health, dollars 90,000,000. For designated public hospitals, dollars 150,000,000. For services and supports for primary care, dollars 50,000,000 ground emergency medical transportation, 50,000,000 behavioral health throughputs, 300,000,000 graduate medical education, 75,000,000 and for the Medi Cal workforce, so the workforce serving Medi Cal, 75,000,000.
So, we are using a few different mechanisms to implement these investments, and these include targeted rate increases that set a payment floor for primary care, maternal care, and mental health services at 87.5% of Medicare, managed care base rate increases, uniform dollar add on increases, state directed payments for hospital care, behavioral health throughputs for county behavioral health rate increases, mobile crisis, transitional rent, and administrative expenses for the C. B. H. I. Fee schedule, graduate medical education grants, reproductive health grants, and workforce investments.
So happy to sort of transition into federal requirements and the impact of HR1 on this. So prior to HR1, CMS and federal law and rules have always required health care related taxes to be either broad based and uniform or generally redistributive, which was defined in federal regulations. They also must not provide any direct hold harmless guarantee in the form of payments, offsets, or waivers. And they also must not provide any indirect hold harmless guarantee, which is defined in regulation. So today, after H.
R. One, all of these requirements still remain in place. However, there are some new requirements as a result of the law. H. R.
One, in effect, prohibits new or increased health care related taxes after the enactment of the law with very narrow exceptions. It phases down the maximum size for most existing taxes that are sort of grandfathered in. The current maximum amount is 6% of net patient revenue. Starting 10/01/2027, existing taxes must phase down until they reach 3.5% of net patient revenue over a four year period. And furthermore, HR1 adds comprehensive new requirements for tax design and features that must be met in order for them to be deemed generally redistributive and thus allowable.
So, effect is that the law prohibits taxes from having a higher burden on Medicaid units as compared to non Medicaid units. So, the impact of these new changes on our MCO tax specifically, Our MCO text is not broad based or uniform, and it's not generally redistributive under the new criteria. We do have a transition period through the end of this calendar year, which means our MCO tax is actually fully intact and fully in effect for the period that it was approved for. So, all Prop 35 supported investments will end as scheduled at the end of this year, except targeted rate increases for primary care, maternal care, and non specialty mental health services will continue. Proposition 35 calls for a substantially similar MCO tax starting 01/01/2027.
That proposition also limits the amount of non Medicaid tax revenue to $36,000,000 This presents some challenges. In order to design a new MCO tax effective 01/01/2027, that uses substantially similar models and methodologies as the Prop 35 tax, it wouldn't meet the federal requirements. And in addition to that, that $36,000,000 amount means that if we were to adhere to that as set forth in state law, ultimately, the net benefit to the state of a redesigned MCO tax would be roughly $6,000,000 compared to roughly $7,000,000,000 per year today. So we're evaluating options for a redesigned MCO tax in light of that state law and the federal landscape. The hospital quality assurance fee, or HQAF, also not broad based, not uniform, and under HR1, not generally redistributive.
We do have a transition period through 06/30/2028. We proposed to substantially increase the 2025 HQAF or the program eight HQAF. CMS let us know that is not approvable because it does not meet HR1 requirements. So based on technical assistance with CMS, we amended that request to match the level of the 2024 HQAF fee or Program eight, and we resubmitted it to CMS two weeks ago. Happy to provide exact funding amounts if it would be helpful or happy to Okay.
For the next year, for the 2026 fee, we plan to submit by next Tuesday at the same level.
Speaker 1
What? You were going to provide the numbers of how much we could potentially get?
Speaker 5
Yes. I was going to provide the numbers of the $20.24 fee that's in effect and the $20.25 fee that's been submitted, if it's helpful.
Speaker 5
It is $6,100,000,000 in fees, which support supplemental payments and grants of $11,700,000,000 which is actually a $5,500,000,000 net benefit to hospitals. And in addition to that, it offsets general fund costs for children's hospital coverage by $1,300,000,000. And to quickly round out the other three taxes, the skilled nursing facility or SNF QUAF fee is not broad based and not uniform. We are assessing whether it is generally redistributive. And if it's not, we can make it so.
So we anticipate not significant challenges with this, like we do with the MCO tax and HQAF. The ground emergency medical transportation quality assurance fee is broad based and uniform. It will be impacted by the phase down of the maximum tax size that I mentioned, but likely not in 2027 or 2028. And finally, the intermediate care facility quality assurance fee is broad based and is uniform. Happy to answer any questions.
Speaker 4
Yeah. No, that was a pretty comprehensive walkthrough of the sort of issues. I know this is a very technical area. You've heard these issues many times before. I did want to just bring it down to really the kind of the core policy issue and really what's before the legislature.
And, you know, both the MCO tax and the hospital quality assurance fee were sort of made permanent in law by voter measures. So really, these are things that can kind of continue in perpetuity and can be adjusted without legislative action. But, you know, really the issue here, at least in the short term, is that, you know, both the MCO particularly the MCO tax, but also to an extent the hospital quality assurance fee, charge higher rates on Medi Cal services than non Medi Cal services. And the reason why the state pursued this is because those Medi Cal charges tend to be associated with drawing down more federal funds. The non Medi Cal charges tend to put more costs onto private providers, which could then be potentially shifted on to health care consumers.
And so, really, the federal government is trying to do is to make these more proportionate. And so that really raises a key trade off for states. Do states continue to pursue a tax or fee at around the same size it was in earlier years, but at a higher cost to private providers and their consumers? Or does the state ratchet down the size of taxes and fees, thereby avoiding that cost to the private sector, but also reducing funding to Medi Cal? And the other challenge, though, is that the state does have some constraints of its own that need to be factored in.
Again, DHCS walked through that. With the MZO tax, have Prop 35, which places a limit on which you can charge commercial enrollment. So, without the ability to raise that, you have to sort of reduce Medi Cal enrollment. That's really what's driving the reduction. So, absent an amendment to Prop 35, either through the legislature or going back to voters, sort of need how that would need to be implemented.
And then, concept, that trade off also could exist for the hospital quality assurance fee. But very recent federal guidance that DHC has communicated to us really does seem to suggest there isn't as much wiggle room here. It does seem to be the case that we are fairly limited on what we charge in 2024 rather than pursuing that much higher 2025 fee that we originally requested. And it also appears the state may qualify for some extensions by pursuing a relatively similar sized one to 2024. And that could be some benefit that would give the state more time to adjust the fee.
So in light of that, the DHS's approach, as we understand it, seems reasonable. But these would be some of the key policy considerations for the legislature to consider.
Speaker 1
Thank you, Jason. Yeah. Very technical. I was coming into this hearing trying to make sure I memorized all these numbers, and so I I think I have a little bit of a hold on it, kind of. I'll I'll start with the MCO tax and kinda what Jason alluded to with the constraints on both federal rules and Prop 35.
If we were to move forward with a new MCO plan with both adhering to both those things, how much revenue would we bring in?
Speaker 3
Today, the MCO, it's a net benefit of about 7,000,000,000 general fund savings or the offset. With the existing structure and Prop 35, it would be about 6,000,000.
Speaker 1
And we can't change the federal. Maybe we can change prop 35. What would we you've said two options taking it back to the voters or the legislature.
Speaker 4
The the measure does have provisions in it that allow amendments with a three fourths vote in each House. The amendments do have to align with the intent and purpose. Did I say Three that
Speaker 4
sorry. Three fourths. Thank you. I'm mixing No, is three fourths. Three fourths.
Speaker 1
No, that's what I said. Wow, three fourths. Okay. Okay. Did I say that?
No, no, you're right.
Speaker 4
Was just You know, I sometimes misspeak, so I Okay. You know, it happens. So three fourths each house. And it also has to align with the purpose and the intent of the measure. And so that would be sort of the key area to explore is what amendment sort of meet that sort of threshold.
The other option, again, is to go to voters and have the voters amend it.
Speaker 1
the ballot. Has the department explored the former option in terms of the legislature? Has there been conversations with the stakeholders behind Prop 35?
Speaker 3
I mean, we are considering all what are the possibilities here, given what HR1 requires and the definitions in the rule, etcetera, and looking make revision to have some ideas in this space. Okay, great. Yes.
Speaker 4
You know, I should also mention that this is also based on our understanding of the HR1 rules today. We're still continuing to get guidance on it, and our understanding is still evolving. So, if the legislature were to explore something with the MCO tax, they could also require some, you know, we would need to understand, you know, again, the CMS rules and guidance and make sure that all aligns to it. So it's an area where we're still kind of learning more.
Speaker 1
Outside of those two options, addressing or tweaking Prop 35 and bringing it back to us to vote on, are there other creative ways the department is looking at for a new version of MCO? Or are those two the only options?
Speaker 3
I think I would just say broadly, we're looking at what are health care provider taxes and the governing rules in that space and what are ways we can think about generating, whether it's the exact same revenue but more than $6,000,000 to support the Medi Cal program. So trying to think broadly in this space.
Speaker 1
And I think I asked this question maybe last year. I've always wondered if we've gotten some analysis of what the impact we're providing the increase to provider rates if, in fact, we're seeing a distribution across California in terms of them actually going to serve in the areas that are most needed. The impact of that, I think that I'm just wondering if we've ever analyzed the MCO tax with that section of its impact. We have not. And to be honest,
Speaker 3
to you, even the twenty twenty five increases that have been laid out, we didn't have certainty of those really going into effect until late last summer because of HR1 and the uncertainty about the transition period, etcetera. So, there these dollars haven't all actually flown out to providers just yet because of the uncertainty with HR1, uncertainty of the transition period, uncertainty of when if our existing MCO was approvable. And so these I are
Speaker 3
It's the MCO that expires at the end of this calendar year. The way Prop 35, there were specific provisions for 2025 spend and 2026 spend. So the 2025 spend, we didn't have certainty that AHRQ MCO at the time last summer was actually still approvable or still valid from CMS's perspective. And so not all of the dollars have gone out because we didn't want to release the dollars and Exactly. Not get the
Speaker 1
Okay. And so the provider rates of $2,600,000,000 for 'twenty six, 'twenty seven, those are still going to be able to go out?
Speaker 3
Yes, with the certainty that we receive that our MCO is valid through Correct. The end of the calendar
Speaker 1
Okay. On the HQAF, I know that you've some we've submitted it to the 2025 for approximately $6,000,000,000 and so forth, but it sounds like we're getting some direction that they want us to perhaps go to the 2024 rates. It's looking like more likely that's what they're going to approve. How does the impact are we going to see potentially a May revise a change in addressing those dollars coming in?
Speaker 3
So, the May revise assumed a lower Program nine amount, given the uncertainty with what we originally No, that's Yes. Sorry, the Governor's budget assumes Yes. A when we originally proposed Program nine, it was about an $8,000,000,000 net benefit to the hospitals at this revised version. And what is basically assumed in governor's budget, it's about 5,500,000,000.0 But it was
Speaker 3
We did, because we knew this rule was in effect and we didn't think we were going to get to the level we thought before.
Speaker 4
Yeah, no, that's correct. The Governor's budget already accounts for the reduction. That higher level was assumed last year, but they've tried to account for it in this year's estimate.
Speaker 1
Got it. Thank you so much. I forgot another question on the 2,600,000,000.0 for provider rates. As compared to Okay. So I'm seeing 2,600,000,000.0 per provider rates for 2627.
How much do they get in this budget year right now for 'twenty five, 'twenty six? What were the provider rates set aside?
Speaker 4
While the department is looking at two it's I think it rounds at $2,700,000,000 and it's each year in 'twenty five and 2026. So, I want know It's same amount. Yeah, right. On an accrual basis, it's sort of you can sort of average it out. The only difference there is on Medi Cal, we have this more complicated budgeting approach where it's when cash goes out the door.
And my understanding is that a lot of these funds are still sort of to be released. And so, there's been a there's a bit of a delay if you look in terms of the actual Governor's budget numbers. But in terms of what the measure provides, it's 2,700,000,000 each year in 2025 and in 2020.
Speaker 3
So the Prop 35 is in calendar year. And so and then we budget, obviously, in budget year. So to Jason's point, it's just sometimes the lag or when things go into effect. But overall, the result eventually gets them to those numbers.
Speaker 1
Okay. And then you spoke a little bit about the waivers that we applied for, and you've analyzed which are broad based, which are uniform, and so forth. So can you clarify, is it the one, the HQAF, that is broad based and uniformly?
Speaker 5
No. HQAF is not broad based and uniform. I think it's the intermediate care facility for the developmentally disabled quality assurance that is broad based uniform.
Speaker 1
Oh, okay, okay. So for the HQAF, just clarify for me. If we continue with the 2024 approach, so long as we keep that, we'll be able to
Speaker 5
do the HQAF? Yes. Provided CMS is consistent with the technical assistance that they've provided to us. What they've indicated is that we do qualify for that transition period. And if we keep it to the 2024 levels, it should be approvable.
This is not written down in guidance. This is based on some verbal conversation and technical assistance. And so that is the best understanding that we have at this time.
Speaker 1
One more question before I jump to you, Jason. And What does that translate in real life impact to the hospitals? And is it all the hospitals that would lose the reduction in the previous level of the age crop?
Speaker 5
So in effect, this simply represents less net benefit to private hospitals compared to what they were anticipating in the $20.25 fee before HR one passed?
Speaker 1
So more impact on private hospitals, not additional impact on rural and distressed hospitals?
Speaker 3
And I will say they didn't get these dollars. These were anticipated. They've never got it. They've never. So these are dollars that we were trying to get for 2025.
We applied to the federal government. HR1 came it was never approved. HR1 came and said, You can't do that, so we had to revise our 2025 proposal. But they actually never received that increased amount.
Speaker 4
Yeah. Well, no, DHCS just made the exact point I wanted to really emphasize, which is when we're talking about both the MCO tax and the HQAF in terms of what's going to providers, know, this really will look more like an opportunity to cost to them. This hadn't been sort of the normal course of business for providers because the MCO tax had only recently been notably increased and only recently been used for provider rate increases. And then the private the HQAF had only been sort of recently proposed to be increased. So in in some cases, in on the in the MCO tax, it'll probably look like more of a onetime boost.
Then in 'twenty five and 'twenty six, but it really isn't. It's really more of an opportunity cost. Think that's a helpful way
Speaker 1
to think about it. And a bigger impact on the general fund because we've scored a lot of savings from it.
Speaker 4
And a bigger impact on the general fund. I think that's a fair statement. The other thing I would also emphasize is we're taught, you know, the there's actually a couple of different policies. It's laid out I know your agenda blazed it out. I know it's real there's a lot of moving parts.
But we're really talking about the the uniform requirement is really the most immediate effect. There could be some other impacts long term that could affect things too. The revenue limit that under federal law is also scheduled to go down over time. So even if we sort of adjust uniformity, we still have to may have to think about those Okay. That limit too.
There's there's lots of rules at play, so it there's it's a lot of it depends. But it just it's just important to keep in mind that that this will be a conversation the legislature may be having over multiple years. Thank you.
Speaker 1
And so what happened to the stakeholder group that Prop 35 asked us to do? Is that all on pause?
Speaker 3
No, those continue. We had one in January to kind of go through some of these HR1 changes to present that if we had certainty through the end of the calendar year, we would be moving forward with the twenty twenty six domains, as outlined in Prop 35. If we only had six months, which is what we had certainty of in January, what we would do. So, we continue those as required under Prop 35. Okay.
And then, if we don't
Speaker 5
Thank you. So issue number five is a budget change proposal for implementation related to the managed care final rule. We are requesting one year limited term resources equivalent to six positions, four year limited term resources equivalent to 33 positions, and expenditure authority of $12,310,000 total funds in budget year to support implementation and ongoing operations of new federal requirements from their 2024 rule that really overhauls a lot of managed care requirements. As part of this BCP, we are requesting four year limited term funding for 25 positions, for which we received one year funding in last year's BCP. So, this new final rule adds a lot of new requirements to Medicaid managed care delivery systems really focused on heightened standards around access, quality, transparency, and oversight.
This includes new standards for appointment wait times, new secret shopper audits to validate compliance with those new appointment wait time standards, new website transparency requirements, lots of increased reporting of financial data, including medical loss ratio and in lieu of services or community supports, and a publicly facing quality rating system to publicly rate the performance of Medi Cal managed care plans.
Speaker 1
Jason? Available for questions. Okay. Great. Department of Finance, last week, I had some requests on BCPs, and I was told that Cal doesn't like to do one to two year limited terms, but this BCP is asking for one year limited one year limited terms.
I just wanna flag that discrepancy of what I was told last week. So if we can do it here, that means we could do it in other BCPs.
Speaker 10
Isabella Elliott, the Department of Finance. There are some situations where we can do it, so it it may be possible with other BCPs. In this case, those one year positions were the workload was specific to two projects. Mhmm. So the timing aligned with that, which
Speaker 1
But the excuse I was given is that CalHR doesn't like to do it. It wasn't on the the type of work, so it seems like CalHR can do it. I'm just saying. It looks like they it can be done.
Speaker 10
It's possible. Yes. There's certain certain things have to be met in order to do so. So I I don't have right in front of me what exactly that is. So it's not always it's not possible in every instance, but it is.
Speaker 1
Okay. Yes. Then I had a question on, like, for example, the capitated rate development division asking for three positions, four year limited. And they're gonna be conducting so three analysts, two positions. They're gonna be conducting continuous and comprehensive monitoring.
But what happens after four years? There's no longer needed to continue monitoring?
Speaker 5
So, at that point, I think the department would revisit to see if that workload is ongoing and continues, perhaps additional limited term funding resources for those positions that are authorized.
Speaker 1
When I was reading out the descriptions of these jobs, it just seemed like these are jobs that seem ongoing. Like, it's hard to it seems like you have to collaborate for more than four years or analyze for more than four years. So I'm just
Speaker 1
58 positions is a ton. That's a ton. I'm I'm not you know, I'm on the state side, so I have allegiance to the state. But, you know, we we have the capacity. Well, we're asking for the capacity to be able to increase our our our our workforce to address these issues.
And then I have the counties coming to me and saying, well, you're being able to do that, and you're not giving us the opportunity to do it as well. Just sharing the messenger here of some of those concerns that we're asking for 58 just on this BCP, and we're meeting the moment, and we're asking the counties to meet the moment without the increased workload. Same question. One information technology is the lead product manager. And after that, I guess they don't have a lead product manager after they're done with their one year.
They're only going to lead the project for one year.
Speaker 5
For some of the sort of more tech focused resource needs, when it comes to standing up sort of new website transparency or quality rating systems that do involve some sort of technical solution or data work, naturally speaking, sometimes there is upfront IT related sort of planning that is temporary by nature.
Speaker 1
Thank you for that. And no other questions here or statements. We're going to leave that item open. Move on to issue number six.
Speaker 5
So issue number six is another BCP related to managed care operations. This BCP requests the conversion of four limited term resources to permanent positions and expenditure authority of $607,000 total funds in budget year to monitor and enforce federal and state requirements across a broad range of Medi Cal managed care areas. The core of this workload really centers on our obligation to verify that MCPs maintain adequate provider networks and timely access to care, specifically pursuant to our twenty twenty four contracts and CalAIM waiver requirements that are distinct from those in the final rule. CMS holds the department directly accountable for these reviews, including monitoring MCP's subcontractors and delegated plans, expanded reviews of behavioral health access, as well as new long term care services that moved into managed care under Cal AIM. So, the work is requires continuous data analysis, network adequacy reviews, stakeholder engagement, complaint and provider dispute resolution, and enforcement actions, including corrective action plans or sanctions as necessary.
Speaker 1
Any comment on this? Just available for questions. Okay. Outside of you know, there's some things that issue six is doing, you know, CYBHI, behavioral. But issue five is asking for positions to kinda do the same exact thing on transparency, quality, oversight of providers.
I'm just what's like, with the 58 positions, you're getting issued five. It seems like a lot of them are going to be doing similar work in this.
Speaker 5
So while there is some slight overlap in terms of the focus area of, say, access or network adequacy in managed care. There are some slight differences. And the workload right now being performed, know, in sort of the work being done by the physicians being requested under this BCP to continue these resources is sort of harkening back to workload that existed prior to the final rule implementation, really focused on those new CalAIM and managed care contracts, twenty twenty four contract policies and provisions that went into effect. And so, the goal here is to be able to sustain and continue that work. And the final rule BCP represents entirely new workload as a result of the federal requirements.
Speaker 1
And the four limited positions that are working right now that you're looking transitioning to permanent, what are they currently working on now?
Speaker 5
So they are working on long term care. So, you know, really carving in skilled nursing facilities and subacute facilities into managed care for the first time. So working on ensuring ongoing implementation of that and access and network adequacy reviews of that. The SBHIP and CYBHI work that was being set up initially, I think, now is really being looked into making sure that the sort of downstream network adequacy requirements that are part of our 24 contracts and CMS waivers are being performed. That's something the department historically did not do, was look at network adequacy and alternative access standards for delegated and subcontracted entities.
And so, that's a lot of workload that these positions are doing.
Speaker 1
Okay. They'll continue that work, and they'll they'll add this to the workload. K. We're going to hold that item open, move on to issue number seven.
Speaker 5
Issue number seven is focused on a budget change proposal seeking to continue resources in place to support a value strategy for hospital payments and Medi Cal as part of a BCP that was sort of approved with one year funding last year. So, the department is requesting 23 permanent positions and one year limited term resources equivalent to three positions, an expenditure authority of $10,000,000 $664,000 total fund to develop, implement, and sustain a comprehensive value strategy for payments in hospital settings in the Medi Cal managed care delivery system. So, last year, we received one year funding for this work. The non federal share was comprised of reimbursements derived from administrative fees on intergovernmental transfers, or IGTs, from public hospitals and California Health Data and Planning Fund. So this request really provides ongoing funding for those positions, and it shifts the non federal share entirely to reimbursements derived from administrative fees on IGTs.
Part of the request was to describe efforts to date to improve hospital reimbursements and the impact of HR1. Happy to go there unless you Yes. Have
Speaker 5
So, recent years, and especially in the past two years, the department has pursued significant increases in state directed payments for hospital care settings. And just taking a step back to provide context, on average today, on a statewide basis, Medi Cal managed care reimburses hospitals at significantly higher rates than Medicare for inpatient hospital services. And for outpatient hospital services, the Medi managed care rates are near Medicare rates. And this is really the result of the steps that we have taken to enhance reimbursements to hospitals through the Medi Cal managed care delivery system, through state directed payments. So just for some examples, if you're interested in some of the amounts.
For designated public hospitals, we increased the enhanced payment program and quality incentive pool from a combined $4,100,000,000 annually for calendar year 'twenty four to $7,300,000,000 annually for calendar year 'twenty five and ongoing, representing an increase of $2,800,000,000 annually for the
Speaker 5
The increase started in 2024. Sorry. The increase started in 2025. For district and municipal public hospitals, we have a directed payment at the amount in calendar year 2023 was $200,000,000, And we increased this and a similar pass through payments to from a combined $500,000,000 annually in 'twenty four to $1,000,000,000 annually in 'twenty five and ongoing. So representing an increase of $500,000,000 annually just for these hospitals.
And for private hospitals, we are proposing to increase managed care directed payments and fee for service supplemental payments and grants from $11,100,000,000 in calendar year 'twenty four to $17,000,000,000 for calendar year 'twenty five. This is in addition to $500,000,000 in support from the MCO tax. So, I just wanted to provide that context about in just the past two years alone, the extent to which we've increased hospital reimbursements in Medi Cal managed care. And in addition to expanding the amount of these payments, we're also accelerating the timeliness in our ability to make these payments more quickly. We are reducing the payment lag from the historical average of twenty one months to fifteen months this calendar year.
And our goal for calendar year 'twenty '7 services is to achieve quarterly payments, which approaches normal claims processing timelines. Happy to move
Speaker 5
Yeah. Yeah, you can move into The HR1 interaction, yeah. HR1 really constrains our flexibilities and our options related to hospital financing. So, as we just described, we increased some of these rates to Medicare rates for inpatient or exceeding Medicare rates, with some even approaching average commercial rates. This is critical, especially to hospitals experiencing financial distress.
HR1 sets new limits on state directed payments, which are the primary mechanism by which we make these payments that I'm talking about. HR1 establishes a maximum amount at the Medicare rate, so they cannot exceed Medicare. And so as a result of HR1, we are reducing state directed payments down from current levels to the level of Medicare. In addition to the cap on state directed payment levels, HR1 also prevents growth that we had been proposed or possible future growth in the hospital quality assurance fee. So we talked about previously the sort of the cap on the net patient revenue in the hospital quality assurance fee, it can't grow further.
And it also imposes new stringent requirements on the tax model related to it being generally redistributive. So it doesn't sort of terminate HQAF, but it cabins it. So given all of these changes, the goal of the VCP and the hospital value strategy is to really achieve sustainable levels of financing and reimbursement for hospitals, navigate the sort of new federal landscape, and secure sort of federal approvability of these financing streams, and also take a step back and ensure we have a strategy to align payments for hospital care with the appropriate incentives, including value and quality, and making sure that hospital outpatient care is not disincentivized as well. Okay.
Speaker 4
Yeah. It sounds like there are really two issues here on Issue seven. The first is just the BCP itself. But then you're also speaking to sort of broader issues in hospital financing and the interaction with HR1. So on the proposal itself, we haven't raised concerns with this proposal, but I did want to note that it appears the administration is also supporting the value strategy through its additional statewide contract with the Boston Consulting Group.
This was part of a budget solution that was enacted last year to help identify operational efficiencies in the state. And that's a more kind of a short term initiative. And it still remains unclear to us how the work that the Boston Consulting Group would interact with the proposal here and also how that would sort of generate savings. So, we're still working with the administration to better understand these interactions. On the broader issue of sort of the impact on hospital financing, the department gave a pretty comprehensive overview of some of the recent efforts.
I just wanted to note that this is a very technical and complicated area, and there are some things to just keep in mind when you're thinking about A key one is that there's often a difference between sort of gross and net reimbursement. And that's because hospitals towards help contribute towards a non federal share of cost. Public hospitals do this by reporting costs or through fund transfers. Private hospitals do this through the private hospital fee, the HQAF. And so, you know, when you're considering, you know, how things compare to Medicare, and what the sort of cost is, you know, it's always helpful to think about are we talking about I don't know, on a gross basis or a net basis.
It has different implications. The limits that are in HRO1 are on a gross basis. So, when they have to be at 100% of Medicare, it doesn't matter if the contributions are coming from the hospital or the state. It's the same to calculating the limit. So, it could mean that the net benefit could be less than Medicare in some cases, depending on how that's implemented.
So, it's just helpful to keep in mind.
Speaker 1
Thank you. I appreciate it. You shared some examples on increasing the payments and then the payment lag. But can you share a little bit about how you're doing that? For example, can you start with you've decreased the payment lag, you said, down to fifteen months, and then you're gonna do it to quarterly payments.
What what did you implement to get to that point?
Speaker 5
That's a great question. To be honest, I will have to follow-up with you to get those details.
Speaker 5
That's we're increasing the payments through the preprints and the packages that we submit to CMS for approval. So that's part of sort of the submission process. And then these go through a federal review process.
Speaker 4
Yeah. No, we had prior to HR1, we had room under previous federal rules about how much we could draw down in federal funds using directed payments and also from the hospital quality assurance fee. And so the department was taking advantage of this additional room. Previously, could pay up to what the average amount is in the commercial for commercial health plans. And so, we were far below that limit, as my understanding.
The exact calculation, I'm not sure of, but we were below that. And so, the department was taking advantage of that additional room. With HR1 now imposing new limits that are a bit lower, will affect sort of the plans here. But we were we had room under that, and so they were taking advantage of that.
Speaker 1
So, these increases that you shared are not going to be ongoing? We won't be able to see those kind of increases?
Speaker 5
increases exceed Medicare levels and they approach, as Elio mentioned, the average commercial rate. And that was done in tandem with sort of CMS technical assistance and learning about that as a possibility. That was also memorialized in the 2024 final managed care rule, where they set average commercial reimbursement as the limit for state directed payments. So we are moving in that direction. And the non federal share for some of this is the hospital quality assurance fees.
So, as you grow sort of the size of the HQAF, that enhances your ability to grow the state directed payment levels. Again, average commercial rate being the limit in the CMS funnel rule, HR1 has brought that down to the level of Medicare. So we have to drop them down Okay.
Speaker 1
And then you mentioned we don't want to de incentivize outpatient care, right, and so forth, with the value based strategy. But how do we put that into practice given hospitals having to now well, they're going to, seeing a lot of more at their emergencies and uninsured care? How are we taking that into consideration?
Speaker 5
Yeah, absolutely. And so right now, our rates are higher on average for inpatient care than they are for emergency department care and outpatient care. And so, part of the hospital value strategy will not only be simply complying with the new federal requirements and sort of devising methodologies to secure the funding we can, but to take sort of a holistic view at what are the incentives in place today in our financing and our sort of redesign, what is maybe steering or incentivizing inpatient care versus outpatient care. And given potentially uncompensated care, uninsured care as a result of disenrollment from HR1, our emergency department
Speaker 5
Yeah. Okay. So that's part of the sort of the global, the global analysis and strategic planning that would go into this.
Speaker 1
Okay. Thank you. We're gonna hold the item open. Moving on to issue number eight.
Speaker 5
Issue number eight is the skilled nursing facility financing extension. It's trailer bill language that proposes a one year extension to the current statutory framework for the Medi Cal long term care reimbursement program. So, this maintains the skilled nursing facility, or SNF, workforce standards program, which provides enhanced workforce rate adjustments to facilities that maintain a collective bargaining agreement, participate in a statewide multi employer labor management committee, or meet basic wages and benefit standards. The TBL maintains the accountability sanctions program, which imposes sanctions on facilities that fail to meet quality measures. The TBL maintains the annual growth rate for SNFs, which is capped at 5% for labor and 1% for non labor costs.
And it extends state statutory authority for the SNF quality assurance fee, the SNF QUAF, which is one of the health care related taxes that we discussed, which adds over $600,000,000 in state revenue annually. The TBL does not propose to reverse the elimination of the SNF Workforce Quality Incentive Program elimination that was part of last year's budget as a budget solution. But as noted, the TBL does maintain the Workforce Standards Program as well as the annual growth rate. And this rate enhancement is unique to long term care facilities. The department is exploring potential new components for a twenty seventwenty eight SNF financing proposal.
We have a robust stakeholder engagement process with over 20 external meetings to date. We don't have proposals that are final yet, but we are exploring a range of ideas to sort of redesign financing for these facilities, including patient centered acuity based rates, performance incentives for appropriate care transitions, more flexibility in managed care plan rate negotiations, and streamlining aspects of the workforce standards program and the accountability sanctions program. We anticipate a new phased implementation beginning in 2028.
Speaker 1
I'll start with the most recent comment on the third question that you answered. In my four years here, I've heard about child care rate reform, developmental developmental disabilities, you know, the true cause of child care, foster rate, true cause. And now this is another form of a rate reform. And in all those, we have not seen success yet. I have no confidence that we're gonna get another financial proposal and it be implemented and provide some reprieve or some, you know, light at the end of the tunnel that we're gonna be addressing and increasing the rates according to the true cause and so forth.
It gets keep getting pushed back and back, all these rate reforms that I've seen so far on sub three. I also don't know if you two are gonna be here next year. I don't know who's gonna be leading this administration and giving these polls. I don't scary. So I'm wondering and hoping that we can do a one year kind of safety net or safety for the SNFs given the uncertainties of next year with the new administration, new goals, what have you, but also the we're batting zero here with rate reforms in sub three.
I know not under DHCS, just under HHS as a whole, that it's really hard for me to confident be confident that, like, hey. We're doing this, so hold off. This is why we need to eliminate the the WQIP, or we don't you know, we haven't renegotiated a new contract because we have a plan place for this new financing proposal. So I I don't have a lot of hope in that. Department of Finance, how much would it cost to do a one year extension of the WQIP?
Speaker 16
have that Natalie Griswold, Department of Finance. So right now, I think we're currently measuring about $149,000,000 in general fund savings in the budget year related to the WQIP. Don't think we have the specific analysis
Speaker 16
So I don't know if we have the specific analysis of putting it back in per se, but those are the savings we're measuring
Speaker 1
And then, is it I want to know if I'm understanding this. So, if this is correct, as I was reading, have SNFs been accustomed to a qua for over twenty years?
Speaker 3
Yes, I was just going to maybe yes, the SNPs have had a QUAF. And I will say they are one of the few providers in the Medi Cal program that is a guaranteed rate increase between 35% since the QUAF has been in existence. No other Medi Cal provider has really had that guarantee in a rate increase every year. And I will say, you know, in terms of rate reform, SNFs used to be funded based on cost, and we would essentially almost pay cost based on different categories. What we're trying to do here and what the transition has been is now part of the managed care program, right, kind of having that ability to seek value from these dollars, and it's not just based on cost.
So, that's kind of the next step in the rate reform that we are speaking to. So, when we speak about rate reform, it's not necessarily increases because these facilities are already getting those increases guaranteed by the, you know, the last iterations of the QUAF statute. And so I think there's a different distinction in how we're talking about rate reform of really thinking about how do we pay facilities to incentivize value, to incentivize transition and care, etcetera.
Speaker 1
So we don't have sanctions and so forth. Have we ever sanctioned any of them?
Speaker 3
This is a new process that was authorized under the last QUAF, and so I think we are in the process of working through that right now. The wait. The one that was It was twenty twenty
Speaker 3
Go ahead. I mean, it takes time to build the data up, right? Because you the data, the measurement year starting in, I think, started in twenty twenty twenty three, the measurement year, and then getting the data from CMS for some of this information to actually hold them accountable. You can give about
Speaker 1
am interested in this space to you know, if the goal is to do the twenty twenty seven, twenty eight plan And it sounds what I'm I'm assuming I'm taking this. Because you're doing that, let's hold off on anything until this comes live. I don't know if that's the department's position as to the extension of
Speaker 3
the of the renegotiating. The purpose of extending was to go through this process. We just did not have enough time to really we didn't want to just extend what we were already doing. Process. We got resources last year to bring on a consultant to help us look across the nation how are skilled nursing facilities and other such facilities funded and have a really robust stakeholder engagement process to really think about how to pay our skilled nursing facilities differently than we've done in the past.
Speaker 1
Why are we so late in getting that going if we got the if we could have started this last year? We just got
Speaker 3
the resources in last year's budget, and we started the process this fall. So I don't think that we're Okay.
Speaker 1
So we got the funding in July. July. July 1, but we haven't started any of the work.
Speaker 3
Oh, the work work process. Oh, yes. That's all started. I think we're having I mean, we're getting great feedback on that process and the engagement with industry, but not having a fully baked product available.
Speaker 1
I mean, as you're going through this process, why can't we just bring back the WQIP for one year? I know it's not a question for you. I get it. But I'm interested in finding out, Department of Finance, if we're going through this process. You need more time to go through this process.
During that time, they're not getting a renegotiation of a contract that expires at the end of this year, and they're also being asked to take on an additional year of the elimination of the WQIP because department needs more time to go through this process. I am interested in seeing if we can look at a bringing back the WQIP just for a year while we go through this process. In the greater scheme of things, 149,000,000. I get I it's a lot. I know it's a lot.
I sometimes it's not, though. But I I am interested in that, and I wanted to flag that and put that on the, on the record. But I'm also would like to know what was stopping us. When would a when would we have started the negotiation for the contract? What's the regular timeline?
Knowing that expires at the end of this year, what's yeah.
Speaker 3
So it would have been part of the governor's budget or may revise of this year. So negotiations would have started this year? We would come forward with the proposal, likely trailer bill language, that would have gotten adopted in June to have a new SNF QUAF. Okay. And
Speaker 3
Financing proposal? Right. We're requesting a one year extension of the existing methodology to continue the work group discussion and really reform how we're doing this work.
Speaker 1
Okay. Director, you mentioned did you say regardless of any of this, they're still getting increases?
Speaker 3
Yes. They get a 3.7% rate increase. When was that? The last one. Every year.
Skilled nursing facilities, again, are one of the only Medi Cal providers that get an annual increase usually between 3.2% to 5%.
Speaker 5
And so just to put a size on that, the amount of that increase is $242,000,000 total fund between 'twenty six and 'twenty seven.
Speaker 3
So from '25 to '26, I don't have the number, but we know from Sorry. '26
Speaker 1
So they just got one three months ago. Okay. Elio, anything else you want to add to this to our finance? Any additional things to add to this? Okay.
Moving on to We're going hold that item open and move on to issue number nine.
Speaker 5
Issue nine is a budget change proposal related to the long term care payment transparency final rule. We request the department requests ongoing expenditure authority of $2,537,000 total fund, with the non federal share coming from the long term care quality assurance fund to support the implementation of new data reporting requirements under this federal rule. Last year, the department received eight permanent positions with only one year funding through BCP. This request, provides ongoing funding for those eight positions and additional contract resources. These are necessary to continue implementing the Medicaid institutional payment transparency requirements, which must be implemented no later than 06/21/2028.
This is a federal requirement. And there's a question about if the minimum staffing standards of the federal rule are unenforceable until 2034 due to sort of a pause from HR1. Why is this requested? This is requested because this part of that final rule remains ineffective. It remains a requirement.
So, while the minimum staffing standards are not sort of enforceable right now by CMS, this is. And so, last year, this department and the Department of Health Care Access and Information requested one year limited term resources given uncertainty with how HR1 or the administration would change their implementation of this rule. But this rule, after the passage of HR1, remains in effect. And so these resources are required satisfy those federal obligations.
Speaker 1
I don't have any questions on this one. We're going hold that item open, move on to issue number 10.
Speaker 5
So I can provide a brief overview of the request for chapter legislation for Senate Bill six sixty.
Speaker 1
I don't like that member. You don't have to explain the bill. I know the bill very well. Know the bill very well. Just my only question is that during the probe, the issue didn't have any costs associated to this to this bill.
Just came out of missed that last year?
Speaker 5
So I think for some of these bills, there's a timing issue with respect to when the fiscal that we're able to produce can be sort of finalized with respect to where it is in the appropriations committee. And so that accounts for the discrepancy between these BCP resources and the fiscal impact analysis and what Doff has provided previously.
Speaker 1
Since most of the work I thought all the work was going to be moved to HCAI. What's going to be DHCCS' role?
Speaker 5
We have to oversee sort of Medi Cal managed care plan compliance with the new aspects of this. So, revising managed care plan contracts, developing new policy guidance, establishing new monitoring and compliance standards.
Speaker 1
But HCAI won't develop even though I moved to HCAI, they won't develop the plan?
Speaker 5
Right. They would not be responsible for administering sort of the implementation of this within the Medi Cal Managed Care Program, including issuing policy guidance directly to MCP is overseeing it. Moving this to HCAI, they largely own it. But we still have a responsibility for direct implementation. Okay.
Speaker 5
For your bill, it's one permanent position, expenditure authority of $178,000 total fund.
Speaker 5
on to the Yes, other please. Got it. For Senate Bill two forty six, the Department requests one permanent position and expenditure authority of $165,000 total fund, the non federal share from reimbursements to implement a graduate medical education program for district and municipal public hospitals and their affiliated entities. So, this is necessary to operate GME payments to the district hospitals. Happy to provide a status update if it would be helpful.
For Assembly Bill five forty three, the department requests four permanent positions and expenditure authority of $698,000 total fund to monitor compliance with provisions of the bill, including preparing and conducting audits, reviewing payments, ensuring compliance, monitoring drug use, checking provider records, and supporting Medi Cal managed care plans.
Speaker 1
On this one, because we talked about it, I think, in the first hearing around, you know, HR1, homelessness, how would these positions in particular intersect with the coverage in homelessness?
Speaker 5
So I know that for this bill, part of the discrepancy between the BCP here and some of the fiscal analysis coming out of appropriations is that we did provide technical assistance into this bill that aligned the definition of homelessness with current departmental policies. Our TA also helped eliminate the need for costly system updates to Kelsaus. In terms of your question, Senator, I might have to get back to you on the particular details.
Speaker 5
to help deliver health care services to individuals experiencing homelessness, that seems like a connection with the impacts of HR1? Yes. There's overlap in terms of the individuals experiencing homelessness being perhaps at highest risk of potential disenrollment as it relates to the work requirements. So, you know, we are taking significant steps through policy and through, you know, in person on the ground implementation supports to protect individuals experiencing unsheltered homelessness from losing Medi Cal coverage or to help them gain it in the first place. I think in tandem with that, this bill provides new policies and new requirements related to street medicine providers or field based providers.
And so, in order to implement those new policies and technical standards within the managed care delivery system, some new resources are required. So, the goal, in some ways, would be to enable those providers to be able to deliver medicine more freely to this population, I think, is the intent of the bill. And under HR1, supporting those providers to also assist members with
Speaker 1
Okay. Any comment? Okay. We're gonna hold that item open. Move on to issue number 11.
Speaker 5
So issue 11 is a BCP requesting three year limited term positions three year limited term resources equivalent to 18 positions and expenditure authority of $3,479,000 total funds to plan and implement the CMS, the second final rule CMS has implemented regarding interoperability. So, this is specifically the advancing interoperability and improving prior authorization processes final rule in 2024. Just as context, several years prior to that, there was a patient access focused interoperability rule for which the department received some resources. This final rule is different. It requires implementation of standardized data exchange, including payer to payer and payer to provider data exchange using secure standards based application programming interfaces, or APIs.
The rule also requires enhancements to prior authorization. The resources requested in this proposal will work to develop policy guidance and then contract language, develop a strategy, and enforce compliance across impacted payers and entities. And as with all federal requirements, we do face the risk of loss of federal financial participation from CMS if we're non compliant. And of course, successful implementation of this final rule would really improve data exchange, enabling greater care coordination and outcomes for members.
Speaker 1
No questions for me. We're to hold that item open. Thank you for joining us.
Speaker 1
We're now gonna be moving into the California Health Benefit Exchange, Covered California.
Speaker 19
Good afternoon, Madam Chair. My name is Katie Ravell. I'm the Director of Policy Eligibility and Research at Cover California. I'll address the first three questions in your agenda, and then I'll turn to my colleagues at the Department of Finance for questions four and five. So I'll start with an overview of Cover California's mission and programs.
The Affordable Care Act, which was passed in 2010, dramatically changed the individual health insurance market. A key component of the ACA was creation of health benefit exchanges that offer comprehensive health plans with income based financial help to lower premiums and out of pocket costs for individuals who don't have affordable coverage through an employer, Medicaid, or Medicare. And Cover California is, of course, our state's health benefit exchange. Our mission is to increase the number of uninsured Californians, improve health care quality, lower costs, and reduce health disparities through an innovative, competitive marketplace that empowers consumers to choose the health plans and providers that give them the best value. We contract with 11 health insurance carriers throughout the state, and our members can choose from several coverage options that vary in the amount of monthly premium and out of pocket cost, as is described very well in your agenda.
Between 2020 and 2025, state and federal action built on the foundation of the Affordable Care Act to provide more support to our enrollees to afford coverage. Federal action included the enactment of the enhanced premium tax credit, which was initially authorized by the American Rescue Plan and then extended by the Inflation Reduction Act through 2025. California also took several nation leading steps to reduce costs for Covered California enrollees, including implementing the California Premium Subsidy Program, which started in 2020, and later implementing subsidies to reduce out of pocket costs and provide health care subsidies for striking workers. For the 2025 coverage year, Covered California offered the highest level of financial assistance in our history due to the availability of the federal enhanced premium tax credit and the California enhanced cost sharing reduction program. That program was made possible by the $165,000,000 appropriation from the Health Care Affordability Reserve Fund.
Covered California used this funding to eliminate deductibles in our silver plans and lower costs for key services like primary care, outpatient mental health, and prescription drugs. This led to record affordability, which pushed our enrollment to an all time high, just shy of 2,000,000 enrollees, which I reported to this body last year. But to move to question two, which is an update on our most recent open enrollment period and the impact of the expiration of the enhanced premium tax credit, which your agenda notes, Congress did fail to extend that enhanced premium tax credit, so it expired on 12/31/2025. With that expiration, Cover California estimates that our enrollees will lose about $2,500,000,000 in premium assistance for 2026. More specifically, our technical assistance has estimated that monthly premium costs could, on average, double for our members, about 97%.
Our middle income consumers no longer qualify for a federal tax credit, and this impacts particularly those who are older or live in high cost areas, and they see even more extreme increases in their premium. And using national data, we've estimated that over time, as many as 400,000 Californians could drop marketplace coverage due to this loss of affordability. So to give you an update on our open enrollment period, that closed on January 31. After doing everything possible to support our consumers through these changes and making their plan selections, we're now tracking our enrollment trends. In the most recent period, 1,900,000 Californians were signed up for coverage at the close of open enrollment.
This was a 3% decline from the same time last year. Our new enrollment was down by 32% and at its lowest level in years. We saw about 110,000 fewer new sign ups compared to last year. New enrollment among our middle income Californians earning above 400% of the federal poverty level or $62,000 annually declined by 59%. And more consumers opted for lower level bronze coverage, which has a lower monthly premium but a higher deductible and higher out of pocket costs.
I would also note that we're closely tracking our renewing population as well, though it is a bit too early to see the full effects of their loss in financial assistance, but we are seeing some emerging trends. About 73 of our renewing enrollees who switched their health plan during the last open enrollment period switched to bronze as compared to 2025. So we're seeing enrollees drop to lower level coverage in an attempt to keep their coverage. And termination rates among our middle income consumers are nearly double what they were last year. So 22% of all of our renewers with incomes over 400% dropped compared to 11% in the prior year.
We're closely tracking our enrollment for this renewing population. These consumers, if they have not paid yet for 2026, they're approaching the end of their three month grace period, and we are watching to see what happens with enrollment over the next month. I will say the last thing I'll say in this question is that while these numbers are stark, we are seeing less severe coverage declines than the rest of the country, and we do want to highlight the meaningful impact of California's continued leadership to keep coverage affordable. So the legislature appropriated $190,000,000 from the Health Care Affordability Reserve Fund to cover California for 2026. Currently, these funds are providing premium assistance for our lowest income enrollees with income up to about 165% of the federal poverty level, dollars 26,000 annually.
Of course, the $190,000,000 we knew could not backfill the loss of the federal enhanced premium tax credit, but the program is making a difference. Nearly 390,000 enrollees are benefiting from this program, and our renewal rates among the members who qualify are holding steady to what they were last year, unlike the significantly higher cancellation rates we're seeing in our higher income groups. The last thing I'll mention on this item is that, as always, Covert California is committed to data sharing transparency, and in the coming weeks, we'll be posting an interactive dashboard so that all interested parties can track our enrollment trends as the year goes on. I'm happy to move to question three, unless you have okay. Question That three is an update on the implementation of gender affirming care program pursuant to AB 144.
Cover California is underway implementing this program. It's very early in this first year program. We're working with our carriers to better understand their actual claims cost, as this is the first time that the state has had to pay costs for these claims. And as we have more information from our carriers and actual costs, we will be working closely to share that with the administration and the legislature. With that, I'll turn to Department of Finance for questions four and five.
Speaker 20
I'm Joe Lonzo Coronier, Department of Finance. For question four, the total loans issued from the Healthcare Affordability Reserve Fund to the general fund amount to 771,000,000. The timeline for general fund repayments to the health care affordability reserve fund includes 200,000,000 in budget year 2627, 262,000,000 in twenty twenty seven, twenty eight, and $3.00 9,000,000 in twenty twenty eight, twenty nine. Okay. Moving on to question five, providing an update on the status of the federal consideration and approval of the California's, Essential Health Benefits Benchmark Plan.
On 02/09/2026, the US Department of Health and Human Services issued the notice of benefit and payment parameters, which sets the standards for health insurance exchanges for the next plan year and impacts ongoing implementation of the Affordable Care Act. The notice as drafted would eliminate a state's ability to revise their benchmark plan to add new benefits to the individual and small group markets. The notice also states that HHS has paused review of new benchmark plans as they consider revising the regulations related to essential health benefits, consistent within the letter that the Department of Managed Healthcare had received in December 2025. As such, it is unlikely that California will be able to adopt a new benchmark plan for the 2027 plan year. On 03/13/2026, the Department of Managed Health Care submitted a comment letter to HHS regarding this 2027 notice.
Speaker 1
Any comment? Okay. I'll start with you. So CMS said they're not gonna be approving anything. For the foreseeable for for the foreseeable future.
Did I understand that correctly? Like, don't even come back to us.
Speaker 21
Based on the content of the information received from CMS, it is unclear on what timeline. They've basically noted, as my colleague mentioned, they're pausing review at this time as they conduct a comprehensive review of the ACA and its charge, and they're actively considering future rulemaking. So I don't know that we have clear guidance on
Speaker 1
Probably the no hope there. Okay. Thank you so much. And then so given the time line that we've gotten in terms of the loan repayment, it's anticipated $200,000,000 next fiscal year. We're putting a 100,000,000 a $190,000,000 now for the state subsidies, affordability subsidies.
Is the plan to double the amount of people who get it or to increase to the current amount of people?
Speaker 19
Governor's budget still proposes a 190,000,000 for next plan year California for 2027. And I'm not sure is that any other comments from Department of Finance? So we would plan to design a program for 2027 with $190,000,000 unless the legislature were to increase that funding amount.
Speaker 1
So right now, it's in the budget, the January's budget, that $200,000,000 is gonna be added to the fund for next year?
Speaker 20
So the governor's budget is maintaining that $190,000,000 from the health care affordability reserve fund to provide the premium subsidies to eligible covered California enrollees up into 165% of the federal poverty level. The governor's budget does not include any new significant proposals and already reflects continuation on previous investments. As the administration is developing the 2026 budget, we are also taking into account a holistic approach as of trying to mitigate the impacts of h r one. The state is not in a position to fully backfill the loss of the federal and hence premium subsidies.
Speaker 1
Sure. I appreciate it. But it's in the January budget right now, the 200,000,000 is going back into the loan?
Speaker 1
count Sorry. I didn't ask the correct question. How much is in the fund right now?
Speaker 20
How much is in the fund right now for yeah. The the ending fund balance for the fund.
Speaker 1
Okay. So we're gonna get more into the fund, but there's not proposed right now to increase to increase the amounts going down to individuals. Correct?
Speaker 1
And did you mention it was 390,000 people that are getting impacted right now?
Speaker 1
Okay. I'm just wondering, because it's in the fund, can you help me understand? If there's more money coming in it's and it's going into the fund. Can we what is stopping us from adding more dollars to the 390,000 people or increasing it to more people?
Speaker 20
Given the volatility of the fund and also the uncertainty of several federal policies, we just said at this at this moment, we cannot really figure out, you know, the out year projections and what the fund will be holding.
Speaker 1
So the federal policies, I don't know which federal I don't I don't see any federal policies impacting this.
Speaker 21
on to my colleagues' comments. As you know, we update revenues twice a year. So heading into the May revision, we'll have an opportunity to provide an update on the revenue and, at that time, could revisit potential legislative priorities to the impact of federal policies. And I'm hoping if Covered California could speak a little bit more to that, but there are out year impacts that may potentially impact the revenue source for, the health care affordability reserve fund. That's the individual shared responsibility.
If they said we
Speaker 1
can no longer assess this penalty on people. Is that what you're saying?
Speaker 21
Well, so it is a state penalty that is required under law. There are specific exemptions. And as we get more data on who would be paying into this in the future, who would be exempt, there is just a lot of uncertainty about the revenue and how the fund balance will look in the next year.
Speaker 1
Before as you gather your thoughts, I'm also thinking more and more people are gonna fall off their health insurance. There might be a correlation as to more people having to pay this penalty at their taxes because they're not gonna be on health insurance anymore. It seems like everything's aligning to get more revenue into this fund. But if you want to add to that.
Speaker 19
Yeah. I think it's correct to wait for May Revision and Franchise Tax Board. They tend to do the penalty revenues, I think, on the covered California flux is, as we implement some of the HR1 requirements, the better we do at implementing some of those requirements in ways that are consumer friendly, we might not lose as many people as that 400,000 total that I talked about. So there is some flux on our implementation about how many folks will lose.
Speaker 4
And just in terms of the uncertainty with the penalty revenue, you know, it could be the case that we could see more penalty revenue as a result of more uninsured people. But there is some uncertainty, and there are some exemptions. Some of the people who fall off might So, qualify for those there is some uncertainty there. It was something we raised in previous reports. So, that is an area of kind of interest and focus as we learn more.
Speaker 1
And can you remind me I know there was a lot of federal coming back, what actually got implemented, but DACA recipients, did they fall off Covered California?
Speaker 19
They did. That was last summer. About 2,500 enrollees we had to remove from coverage. Okay. And
Speaker 1
then can you talk to me a little bit more about the Bronze Plan? So you've mentioned has higher intake on the Bronze Plan, it's the lowest amount of what consumers have to pay, but it's the lowest coverage. That's right. What is a Bronze plan? What do you get out of that?
Speaker 19
You get primary care visits at about $60 a visit, and we'll follow-up with a benefit design. It's a standard benefit design. But it's the highest primary care cost for a visit. Generic drugs, somewhere in the neighborhood of $20 a script, but we'll follow-up. And then deductibles that are $6,500 for an individual and then double for a family.
Speaker 1
Okay. So, it's you have coverage. It's you only pay if you use it kind of thing. Like, it's because what if I don't go? That's what most people are trying to choose this plan?
Speaker 19
So they'll still pay their monthly premium. Yeah. And then they'll have to decide, if I need services, can I afford that $60 primary care? Can I afford to fill the script? If I have a high cost of coverage and I wind up approaching that deductible or that maximum out of pocket, how am I going to afford that?
And then
Speaker 1
what are we doing? What is our response to the fact that Latinos saw a drop in 39% in enrollment and our black and African community saw a 34% drop in enrollment? How are responding to that? Yeah.
Speaker 19
We are working with those communities. We've redesigned our marketing with a culture first approach. So we are trying to reach communities, sign them up, and then we're trying to emphasize the value of coverage as they're enrolled, how they can use free preventive services, how they can access primary care, make a relationship with their doctor. So we're trying to make the value proposition very clear for all of our enrollees and for our communities who are impacted more strongly. I think the other thing that we did very intentionally as we looked at targeting that $190,000,000 in state dollars, we looked at a variety of different options our Board did for implementing a premium subsidy program.
One of the key metrics we looked at is how will any particular program design impact equity. And our modeling showed that when we targeted the lowest income enrollees, we would have the greatest retention among our black, African American, and Latino communities. So it is baked into the program that we're offering this year to try to support those communities. We're trying to do more in the way of outreach and marketing.
Speaker 19
Oh, I would be happy to follow-up with that. I don't have those details at my fingertips.
Speaker 1
I'd be very interested in you know, we throw out the word culturally competent approach campaigns, but what does that exactly look like? Have we tapped into the our community health workers? Just or are we just doing ads? So I'd I'd wanna know that.
Speaker 1
follow-up. Okay. On the gender affirming care program, the allocation of 15,000,015 million that was were those set aside last year, have we utilized all of it? We Department of Finance has the answer to that one.
Speaker 21
I don't think at this time we have an estimate. As my colleague from the Covered California mentioned, there is as this program is new beginning in plan year 2026, I think there is still a lot of uncertainty about the data, but if you'd like to
Speaker 19
offer any more insights. No. That's right. There is and on a monthly basis, we wouldn't have expected to, just three months into the year Okay. Use all of that, but we will follow-up on the the total amount.
Speaker 1
Okay. If then they re revise if we gave a little bit more of what was used because I guess my question stems from this. We put money aside, but a lot of providers are no longer providing this care. So is the money there and there's no providers, and is they actually getting utilized? That's part of
Speaker 1
Thank you. We're gonna I don't think I need to hold that item. I'll hold it open just in case, and thank you for that. Thank you. We're now gonna move into our almost last item here to have a in-depth conversation on employer based health coverage in California.
If I can have my my panelists join us up here. LAO just came out with a report on possible revenues but didn't put this one on their list. I was disappointed. It was perfect timing too. Okay.
Today, we're gonna be hearing from individuals from UC Berkeley, the Maintenance Corporation Trust Fund, and Health Access California of the state of who is who is employed, who has health coverage, what is the gap there, why aren't people getting health coverage if they're working full time, the makeup of Medi Cal, and what can we do there? Seeing what we've heard today, the cost continue to go up, the status quo cannot be sustained this way, And we just cannot continue to just, on the general fund, throwing billions and billions into this. What can we do differently? So Miranda, if you can kick us off with the conversation.
Speaker 11
Thanks so much. Thanks for having me today. I've got some slides that can hopefully be shown overhead, and I'll go ahead and introduce myself while we work on that. As I said, my name is Miranda Dietz. I'm director of the health care program at the UC Berkeley Labor Center, and we focus on issues that matter to working families in California, including health insurance and Medi Cal, which covers a large number of low wage workers in our state.
So our health insurance system is primarily a job based system. Most people under age 65 get their coverage through their job or a family member's job. And workers usually contribute to the cost of premiums, and employers usually pay a substantial portion of the premium cost. So on average, employers are contributing more than $8,000 for single coverage and more than $21,000 for family coverage. But that's not true for everyone.
If
Speaker 11
at where workers get their health insurance, the dark blue here on this slide are the folks who are getting coverage through their own employer. And you can see that workers who work in low wage jobs, that's folks who are paid less than about $20 an hour in 2022, and that's about a third of California workers. They're much less likely to get coverage through their own jobs, and they're more likely to be covered by Medi Cal, that's the share in orange, or to be uninsured, the folks in gray. So why are some workers left out of job based coverage? There's three basic reasons.
First is that their work just doesn't offer coverage. So they might be self employed or work at a firm that doesn't offer coverage to anyone. These are usually smaller firms with under 10 people. About a third, 35% of firms with 50 or fewer employees, offer coverage to at least some of their workers. And if you have 50 or more full time employees, the ACA says you have to offer coverage to at least full time workers.
So the second reason is that folks might not be eligible. So part time workers are often not eligible, and there can be waiting periods for new workers to become eligible for health insurance coverage. And then the third reason is that coverage might just not be affordable to the worker portion of the premium cost. On average $1,300 for single coverage and more than $7,000 for family coverage in California, these are usually the same costs for the CEO and for an admin assistant. But whether that cost is affordable, right, is going to feel very different for the CEO versus the administrative assistant.
So when we look nationally at the issues of offer and eligibility, we can see that lower income workers, folks who are making 200% of the federal poverty line or less, these folks are less likely to work at a firm that offers coverage to anyone. That's the dark blue bar here, about 60%. And they're less likely to be eligible for that coverage at just about 50%. And when we think about affordability, for a worker with really low income, say, at the poverty line, right, the average cost of job based coverage can just feel completely out of reach. So for a family of four with earnings at the poverty line, that's about $32,000 a year, they'd have to pay 23% of their income for the average family plan through their job in California.
And chances are that plan would come with a more than $3,000 deductible. Even a single person with earnings at the poverty line, coverage for Just themselves would be 8% of income, and that would also probably come with a large deductible. And given the cost of living for folks living at or near the poverty line when money is so tight, dollars 100 a month for health insurance premiums alone can feel completely out of reach. So even though we have this job based system, just under 60% of workers have coverage through their own job. And there are differences in who gets health insurance from their job across race and ethnicity.
To the blue lines here, you can see that Latino workers are the least likely to have this kind of coverage. And noncitizens are also less likely to be covered by job based coverage. And note that this category is quite broad and includes all noncitizen workers. The rate for undocumented workers would be lower still. The lack of job based coverage for low wage workers has state budget impacts.
Many workers I was pointing the right direction one time. Got right. Sorry. So there are lots of workers on Medi Cal, 3,600,000, excluding those who are self employed. And given DHCS's projected costs, the state will spend $36,000,000,000 in both state and federal dollars on Medi Cal for these workers.
Another way of looking at this is to look at who's actually enrolled in Medi Cal. Of the enrollees who are 19 to 64, most of them are working, about two thirds, which you can see kind of in the blue and green on this chart. And most of the folks who are working are working full time. This right is newly relevant because of HR one work requirements, which we know from experience in other states are not going to increase the number of people working but will cause people who are already working or should be exempt to lose their coverage and become uninsured. If we look a little bit more at who are the workers enrolled in Medi Cal, we can see the industries that these Medi Cal enrollees are working in.
This analysis includes self employed folks, and it shows us the industries where there's a higher than average share of workers who are on Medi Cal. Close to the top there, we can see restaurants, bars, food services at 35%. So that's about one in three workers in this industry are enrolled in Medi Cal. Some of my colleagues at the UC Berkeley Labor Center have done research focused on this slice of the industry and specifically fast food industry workers in Los Angeles County either were enrolled in Medi Cal or had an adult in their family enrolled in Medi Cal at a public cost of $700,000,000 a year in 2019. And that's just related to fast food in LA.
They also projected a substantial reduction in workers enrolling in Medi Cal as a result of the fast food minimum wage because when wages are improved through the statewide minimum wage, the $25 health care minimum wage, or the $20 fast food minimum wage, state expenditures on Medi Cal are reduced. Focusing on one other industry here, on construction, 21% of workers are in Medi Cal. And my colleague's analysis of the construction industry in California found that almost half of families of construction workers in the state are enrolled in a safety net program like Medi Cal, SNAP, Earned Income Tax Credit at an annual cost of over $3,000,000,000 There are higher wage, high road employers in construction who offer health insurance to their workers, but the low wage, low road employment practices in some of these industries have real public costs. Beyond looking at industry, we can also look at firm size of workers enrolled in Medi Cal. Some are in those really small firms that usually don't offer coverage, but about half are in firms of 50 or more, and more than a quarter are at firms with 1,000 or more employees.
Now, in some other states, like New Jersey and Washington, the states are collecting and reporting on data on which firms employ people who are enrolled in Medi Cal. And, you know, there's some large employers that we've all heard of at the top of those lists. And as other states think about who has responsibility in our current health system, some are considering requiring contributions from employers who have workers on public coverage. Vermont has done this for years and Massachusetts, New Jersey, and Washington are considering it, as is Colorado. Oregon has set up an advisory group to suggest how to fund Medicaid.
This idea of making sure that employers are contributing is not new. We have this largely job based system for health insurance, but we know it leaves some people out. Medi Cal plays a really critical role in covering many of these folks and their family members And funding Medi Cal and making sure it's an option for Californians who need it is vital to maintaining our progress toward universal access to coverage. Thank you. Thank you so much.
Speaker 13
Good afternoon. Rene Bayardo with the translation. Good morning. My name is Jesus Barrios Fierro. I'm 64 years old and a proud husband and father of two daughters.
My youngest daughter is currently pursuing a degree in biology at the university. For twenty five years, I worked as a janitor at Lucky Supermarkets in Livermore. Through our union contract with SEIU USWW, my coworkers and I were able to secure fair wages and essential benefits, especially employer sponsored health insurance, family health insurance, that protected the health and stability of our family. Although I worked in Lucky stores, I was employed by King Janitorial Equipment, a cleaning contractor. In February, we were informed that the supermarkets would no longer pay for the benefit standards required by the union contract, and we were laid off.
Shortly afterward, a new contractor, mister Clean, a non union company, began operating in the stores and offered to rehire some of us only at minimum wage and without health insurance, a pension, or paid vacation. My coworkers and I were forced to make difficult decision, clean for this new contractor at minimum wage and without health benefits or seek new employment elsewhere. I have been living with diabetes for fourteen years. When I lost my job, my greatest concern was how I would continue paying for the insulin. I need to stay alive and remain able to work.
Fortunately, our union decided to support the laid off workers by covering two additional months of our health insurance using accumulated funds. However, that coverage ends in April. Today, have a temporary job as a field investigator at the Maintenance Cooperation Trust Fund, and there's a possibility that I may obtain basic health insurance soon, but that uncertainty remains overwhelming. The reality is that with the high cost of living in California, many working families can barely cover our basic expenses each month. A medical emergency can mean falling into debt or having to rely on public programs such as Medi Cal.
I have coworkers who still cannot find employment and others who are working two jobs at the same time without benefits just to survive. Regrettably, the likelihood of finding a job with our skills that provides employer sponsored health insurance is unlikely. This means that for many former coworkers now at mister Clean, they will be looking to Medi Cal. And for those that get a job at another janitorial company or are working two part time jobs, they will look to Medi Cal too. That is why I'm here today.
California needs a healthy, stable, and protected workforce. I firmly believe that employers must take responsibility for ensuring that the people who sustain their business have access to health care and dignified working conditions. If employers will not provide health care to their employees, then they must pay their fair share to guarantee Medi Cal is there to provide the care of our workforce and their families need and deserve. Thank you.
Speaker 7
Afternoon. Diana Douglas with Health Access California. Thank you, Madam Chair, for convening this hearing and including this conversation on employer coverage. We cannot talk about employer coverage without also talking about affordability, our Covered California marketplace, and our Medi Cal Safety Net, as we've heard today. More Californians overall have had coverage in recent years.
However, the percent with employer coverage is decreasing. This means our safety net programs, Medi Cal and Covered California, are taking on more responsibility while employers do less. At the same time, both Medi Cal and Covered California have faced the significant cuts we've been hearing about due to the Trump administration. While the ACA includes an employer mandate to ensure that employers are doing their share to keep covered, the mandate is unfortunately not proving to be an effective tool, as we can see by the rising numbers of employed Californians who are relying on Medi Cal. The employer mandate only requires that coverage is offered, not that employees must actually enroll, and the coverage must meet the federal definition of affordable, but that only ensures premiums are no more than 9.5% of salary, which does not meet the definition of affordable for many regular people's actual budgets.
Meanwhile, deductibles and other out of pocket costs have been skyrocketing. It's no surprise that many potential enrollees may see a health plan that costs almost 10% of their salary, comes with a deductible in the thousands of dollars, plus significant co pays to simply not be worth it. And many other employees don't have the option of this expensive employer sponsored coverage. The ACA employer mandate has numerous exemptions for part time employees, businesses with fewer than 50 employees, and seasonal workers. The high premiums, escalating cost sharing, and employee mandate exemptions have resulted in a system where employers are off the hook while workers struggle to afford coverage, rely on Medi Cal, or go without.
Consumers with employer based coverage are being left behind, finding that even though they're working full time, have employer based coverage, the premiums eat away 10% of their earnings. If they have a more serious health issue, they could be on the hook for deductibles of $4,000 or $5,000 or may skip getting care altogether. Our medical system is also being left behind, facing both federal tax and being taken advantage of by employers paying such low wages that workers remain in poverty and dependent upon the safety net. Meanwhile, the cuts that are decimating our state's health care funding are being used for tax breaks, largely going to the same corporate employers who are failing to provide affordable coverage for their workers. Health access supports the coverage mandate, which, if properly enforced, could help employees have better access to coverage, even if still expensive.
Health access is also strongly supportive of efforts to reduce the overall cost of health care, specifically California's Office of Health Care Affordability, which will keep premiums from outpacing wages, helping both employers and their workers. Finally, Health Access sees revenue solutions based on employer responsibility for workers on Medi Cal as key to rebalancing our safety net. For too long, employers have enjoyed federal tax breaks, now more than ever, thanks to Trump, while still leaving their workers to depend upon the state for coverage. To ensure employers are doing their fair share in keeping the workers covered and healthy, Health Access would support a revenue model that would, for example, require employers to pay a fee to support health coverage. A successful revenue model would need to be well thought through and maintain the goals of our accessible, quality health care system.
It would first need to prioritize keeping Californians covered and healthy, revenue going to folks in Medi Cal and public services. Second, it would need to be long term and impactful. We seek sustainable solutions so we can get out of the cycle of these conversations year after year. It would need to be targeted and progressive, really cracking down on those who are most abusive of the system of tax breaks and not taking care of workers. It would need to be nondiscriminatory, not allowing workplaces to discriminate against Medi Cal enrollees, or take that into consideration in their hiring.
With a well thought through revenue solution, we could help ensure the full vision of the ACA and California's vision for universal coverage could finally come to fruition in a sustainable and long term way. Thank you.
Speaker 1
Thank you so much for your comments on this. Director Miranda, I had a couple of questions. I'll start with with you. You shared that about 40% where is that? 40 about 42% are working full time on Medi Cal.
Does that capture potentially, like, what mister Jesus mentioned that some people are working more than one job and that adds to the full time, or is this full time one job?
Speaker 11
I believe that folks who are working multiple jobs that adds up to full time would count in the full time section there. So it's about the individual and the hours that they're working.
Speaker 1
Okay. Still making them ineligible since they're working maybe part time and part time?
Speaker 1
Okay. And then you brought this up, and you've talked about the cost and percentage that people are paying. And, you know, we've thrown around the number of the percentage you should pay for rent. Is there a number of percentage that one should pay for health care that is the affordable percentage? The federal, you said nine percent?
Nine point five. 9.5. Is there another number?
Speaker 11
In the Affordable Care Act, the amount that a family has to contribute to premiums varies by income. So it's graduated, so like lower income families are paying a smaller percentage of their income toward the premium, which is progressive and makes sense because sort of the space in your budget, you know, 9% might make sense for someone in a more middle income category. Sure.
Speaker 1
So there hasn't been research on what is exactly should be the percentage someone should pay on health insurance outside of as your income grows?
Speaker 11
Not that I'm aware of. In the Inflation Reduction Act, which reduced the contributions to premiums through the exchanges, the maximum was, I believe, 8.5% of income. So that's at least a maximum that's been out there. Okay.
Speaker 1
And you shared some data specific to fast food workers, LA in 2019. But do you have any information on post the fast food minimum wage increasing? Did we see more of Did we see them fall off of Medi Cal?
Speaker 11
My colleagues did some projections for fast food workers who would no longer be enrolled in Medi Cal as a result of getting higher wages.
Speaker 1
Okay. So there did it show so I showed a correlation that if Yeah. That was projecting that able to do you know if your colleagues did any actual analysis post the implementation of fast food minimum wage, or was it just the pre analysis of an assumption that they would fall off of Medi Cal?
Speaker 1
Okay. Any chance you have a little bit more to speak on what Massachusetts and the other states, are they collecting just the data of who is on Medi Cal and who is their employer, Or are they going beyond that?
Speaker 11
So in Vermont, they're collecting a fee, the Employer Health Care Fund contribution, which is around $300 per quarter for workers who aren't covered.
Speaker 1
So an employer in Vermont, they have an employee, and they're not offering health insurance to them. And because of that, they have to pay $300 per employee per quarter to the state? Yes. That's my understanding
Speaker 1
Is that the only state in The United States that does something like that?
Speaker 11
I think Massachusetts also has their employer medical assistance contribution, which is up to $750 per employee who's on public coverage.
Speaker 1
So like you mentioned, I recognize there's been discussion in this across the legislature in looking at this. This isn't a brand new idea. Other states have looked at this to make up and be able to fund a sustainable manner. That is in a onetime tax increase. It's to be able to fund Medi Cal and offset the cost to taxpayers.
Okay. Jason, I don't know if you're able to answer on that report that just came out from LAO. Given the fact that a couple of legislators have brought this up, it's been in the news a couple of times, I'm just wondering why this specific approach was excluded from the report of potential revenue.
Speaker 4
I probably have to take that back to our team that worked on the report. They did look at a number of metrics, and they selected the tax options that they felt sort of met those metrics the best. But I'd to turn to them for more specifics. I would also say that it's my understanding that, you know, every tax consideration has trade offs that need to be weighed. It's my understanding there's some research that, you know, these sorts of employer based taxes can result in sort of employment effects and that, to the extent that that is an effect, might need to be, you know, considered as part of the effect.
But again, I'd to circle back to what
Speaker 4
I'm probably a little out of my depth. Probably should consult with our economist on that. But but, yeah, happy to circle back with the committee.
Speaker 1
Okay. Thank you. And is Katie Rabble still yes. And I'm so sorry. I I missed your title.
The a you know, if if this is out of your house, please let me know. Or maybe you could, I don't know, tap in. For a for the mandate for ACA coverage, there's a penalty if you don't provide it, but it's it's thirty hours. You have to do thirty hours considered to be full time and have 50 employees or more. Did we see any penalties accrued from that or any assessed any penalties, or did we see employers shift to the hours to not have to make that meet that level?
Speaker 19
Covered California didn't look at that. Miranda, I don't I don't know if you all looked at that, but I have not tracked that.
Speaker 1
Okay. Do we have any research information on those remaining, like, about 40% in California that aren't covered by insurance. It could be you're ineligible, declined coverage, or covered by another plan. Is do we have information on disaggregated, like, exactly? Or is it just the overall 40%?
Speaker 11
So we have a little bit of national data looking at the importance of the offer and eligibility part, right, that lower income workers are less likely to be at a firm that offers and less likely to be eligible for that offer. So it's playing a bigger role for lower wage workers than for higher wage workers in the folks that don't have coverage. I don't have the disaggregated exactly how many are because of which reason.
Speaker 1
Okay. And then maybe do we have a makeup of who was on Covered California? Are they, you know, 1099ers mostly? Is it
Speaker 19
We have a mix. We have a mix of self employed, folks who are working full time, and I'm happy to provide that for you.
Speaker 1
I would love that, to also know, if they're working full time, why do they choose Cover California and not employer based?
Speaker 19
Yes. We'll follow-up with that. Another large group for us are early retirees as well. So we'll send that data. Okay.
Okay.
Speaker 1
Okay. Because one of the things I forgot who mentioned the point is, like, while employer coverage has declined, caseloads in Medi Cal have increased. I think one of you said that.
Speaker 1
Okay. Is there a starting point when that happened as to when we started to see a decline in employer coverage?
Speaker 7
I don't know the timeline trajectory, but I believe Just we have that and can provide
Speaker 1
I wonder if there was something at a point in time when we a policy change that happened as to why that started seeing an opposite impact or effect. No? I'm not sure that
Speaker 7
there was a single point in time policy change, but I think it was the effects of how many employees are offered coverage and also the cost of coverage. Okay. Maybe
Speaker 1
I should do it in English. So I I asked, you know, because he shared that his friends do a couple of jobs, and I was like, why the two why is the need for the two jobs? So he just said that most a lot of employers are offering part time hours, so you have to get two jobs, if I heard correctly. Oh, I'm sorry. I thought you were gonna add to that.
And and my my my second question is, are you hearing or in your conversations or your your experience is that you you wanna work full time, but sometimes in transition of management, they come in and don't offer full time hours.
Speaker 1
And are you seeing, when that happens, when you're reduced to hours, you've had benefits before and now you don't, are you seeing you and your colleagues, your peers now going to Medi Cal to find that benefit? Or you just say, I'm not going to sign up for any insurance? So they're working part time several jobs, and then so they signed up for Medi Cal, but now they're seeing on the news that Medi Cal is gonna be taken away from them given the new rules. So they feel like they're stuck. Okay.
Thank you. To you two here, what do you think is needed in California if we wanted to implement something like this? If we wanted to do something similar to Vermont? Or I know you shared some of that.
Speaker 7
Yes. I mean, if we want to implement something like that, I think we need to carefully work through what would be the best solution for California, what would be the best solution to ensure that we are generating enough revenue to go into the system and bring sustainability, access and coverage that we need and to uphold the values of California. I think we would need to work through how to make sure that it was targeted at the employers and folks who are, you know, most abusive of the system, reaping the most rewards from taxes while keeping the most of their employees on Medi Cal or gaming the system in the form of not providing the, you know, hours and wages and everything needed. And we would need to, you know, work together in broad based coalitions here with the legislature, advocates, labor partners, the consumers who are out there, you know, in the front lines of not having coverage to agree on a solution and move forward with it.
Speaker 1
And my other you mentioned something as well. My last question is, health insurance is offered, then the employee denies it. And they don't deny it because their spouse has it or any but they deny it. Do you think that should be changed that the mandate should go beyond just offering that the employee must take it, Or anyone have thoughts on that?
Speaker 7
I don't know that I would, you know, can say right here exactly how that should be approached because I think it's a balance of affordability also. We understand when employers or I'm sorry, employees see an offer of coverage, but the premiums are going to take up nearly 10% of their salary, and then they see how big the deductible is and how much they'll have to pay out of pocket to even make use of that coverage that they're paying for. You know, we understand that people are making difficult choices between coverage and food on the table or rent.
Speaker 11
I would just add, my understanding of the Vermont fee is that it is on workers who don't take up their employer's offer, who are either on public coverage or uninsured. So if they do take up a spousal offer, fine.
Speaker 1
They don't pay for their employee. Sorry? Yeah. Yeah. So they won't they won't pay for their employees?
Speaker 11
the fee is not just for employers who have workers on Medicaid. Uh-huh. It's also for employers who have workers on the equivalent of covered California or who have workers who are uninsured. So it's a more broad based fee. But it's sort of the other side of not forcing the workers to take it, but recognizing that maybe there's an affordability challenge with what you are
Speaker 1
offering. More You're people more of your got it. Yeah. Okay. Thank you so much.
I appreciate it. Appreciate it. We have a lot of proposals for investment, but only one of them are gonna be for presentation. So for the level of care nursing staff for programs for all inclusive care for the elderly can step forward. Ma'am, you will have three minutes for your presentation.
I don't think it's on. You can get it closer to you, too, if you can.
Speaker 25
for this opportunity to speak to you today on behalf of the Cal PACE Association. My name is Julie Erdmann, and I'm here today representing OnLoc, the founder of PACE. PACE allows for frail, older individuals who qualify for a nursing home level of care to remain safely in their homes and communities while receiving fully integrated and coordinated medical and social services. PACE is interdisciplinary with an 11 plus member team that not only cares for the participant, but also supports their caregivers, family members, and recognizes that successful care extends beyond the individual. It's a proven model that works and the demand for it continues to grow.
For a little background: Every individual who chooses to enroll in PACE must be evaluated by DHCS and determined to meet a nursing facility level of care. This determination is a regulatory and programmatic requirement and serves as the gateway to enroll in PACE. PACE organizations submit a level of care form to DHCS on a monthly basis, and each form is manually reviewed and individually evaluated by a nurse evaluator, too. These are not administrative transactions. They are clinical determinations that directly affect whether a frail older adult can assess comprehensive community based care through PACE.
We want to start by
Speaker 1
So, sorry, Tyler. I'm going to ask you a question here, if you can stay for a minute. Sorry. Almost. He was almost gone.
Speaker 25
We want to start by acknowledging that DHCS we recognize that DHCS staff are working hard to manage a significant and growing workload. Each month, the department is reviewing 1,500 to 1,800 level of care determinations, an essential step in the PACE enrollment process. And we appreciate the continued commitment to this program. At the same time, the strain on the Department's capacity is having real consequences to access to care. To manage workload, DHCS has recently begun implementing earlier internal dates for the level of care submission, around the middle of the month.
Previously, it had been five calendar days to the end of the month. What this does is we understand the intent behind the change, but it's an impact significantly. The earlier deadline effectively shortens the enrollment window, making it harder for eligible seniors to access PACE in a timely manner, to introduce delays into the process that is already time sensitive for frail older adults. Delays in enrollment mean delays in care. These individuals who often have complex medical and social needs.
Generally, when a referral comes to a PACE program, these are people that have already had a change in condition. Somebody has noticed that something's changed, and they're reaching out for help. So, it's really time sensitive that we get that care to them as quickly as we can. When access to coordinated care is postponed, it can increase the likelihood of emergency department visits, hospitalizations, or even premature institutionalization, outcomes that we all are working to avoid. I mean, that's really the goal of our program.
Keep people at home and in the community out of the hospital and out of the nursing home. This is not a question of effort. It's really a question of capacity. So, our ask today, Cal PACE is respectively requesting funding for four additional state nurse positions dedicated to reviewing level of care determinations. This is a targeted short term solution that would help the Department keep pace with current demand, reduce delays, and restore more timely access to care for eligible seniors.
At the same time, we want to be clear that we see this as part of a broader conversation. Cal PACE is committed to working in partnership with DHCS and the legislature to identify longer term efficiencies and process improvement that can support the continued growth of PACE.
Speaker 1
Thank you. I just wanted to see if you could if you're able to address if you also are witnessing or agree there's a backlog in processing these. Thank
Speaker 5
you, senator. I believe we received this a copy of this request, I think, this morning. So I haven't had time to fully digest it. So I can't speak to sort of the status or the extent of the backlog or the specific workload associated with processing level of care determinations. But taking a step back, think the broader context is sort of the two year moratorium on new PACE applications due to, a, the department's ability to administratively process the significant growth in new PACE requests, coupled with needing to develop sort of a strategic policy about sustainable PACE growth that supports appropriate access.
So while that two year moratorium is in place, we really needed to stabilize our internal resources to sort of handle that application backlog. But the specific request about the level of care determinations, I'd have to follow-up.
Speaker 5
We have proposed a sort of not for applications that had been submitted, we committed to processing those, those in sort of Q1. But for new applications, we had proposed a two year moratorium of no no less than two years.
Speaker 1
Okay. Yeah. I'd I'd like to I'd like to hear if you can get back to me if the department does determine that there is a backlog here. I know this is a new a new request, so I I'm not looking to see how where department finance is on this, but just wanna know if if this is the if you're accurately if you're on the same page, at least on the delay, so that is an issue.
Speaker 27
Madam Chair, Teri McHale with Aaron Reed and Associates representing the California Optometric Association. First of all, thank you for your endurance and your willingness to be here all afternoon. Madam Chair, the California optometrists are primary care providers giving over 80% of the Medi Cal treatment to Californians, yet they have not had an increase in their fees since you were in junior high. It has been twenty six years since they've had an increase. They get $47 for the patients that come in.
Not even junior high. Not even junior high. That's how long it's been. Not how long, you know, I better be careful on this age bit here. But they get $47 for each treatment that they do.
It does not, in some instances, pay the cost of the rent. It does not pay the cost of their employees. It does not pay the cost of their equipment. Twenty six years. What we are asking for, Madam Chair, is $30,000,000 $15,000,000 from the state, 15,000,000 from the federal government.
That puts us close to what ophthalmologists get as they pay their PAs and their nursing assistants 87.5% of the Medicare reimbursement. It's critical. What we are seeing throughout California is that optometrists cannot afford to provide these services.
Speaker 27
We don't need to make we don't need to get rich, Madam Chair, but we do need to be able to pay our bills. Thank you. Thank you.
Speaker 28
Madam Chair, Sarah Nocito, on behalf of the California Chronic Care Coalition, we respectfully urge consideration for restoring obesity medication coverage consistent with the balance model and federal requirements. The obesity landscape has changed significantly since California enacted the cuts in last year's budget, providing the legislature a new opportunity to restore coverage with a considerably lower fiscal impact than a year ago. Obesity is a chronic multifactorial disease affecting nearly thirty percent of California adults. And aside from causing numerous other diseases, untreated obesity adds billions in avoidable costs to Medi Cal. Cutting off evidence based treatment does not eliminate those costs.
It just delays them until patients are much sicker and much more expensive. We ask this committee to direct DHCS to fully analyze the cost of obesity medication coverage, especially in light of the new balance model pricing and including the long term offsets from preventing diseases and related complications. Low income Californians should not be forced to get sicker in order to qualify for the same medicines that they could have used to prevent the disease. Thank you.
Speaker 29
Madam Chair, Tim Madden representing the California Chapter for the American College of Emergency Physicians. We appreciate the inclusion of our budget request in the proposals for investment in the packet. We are asking for $100,000,000 which is a continuation of funding that's occurred over the past three budgets. This funding goes towards increasing reimbursement for emergency physicians treating Medi Cal enrollees, and the importance there is staffing levels. This allows us to staff emergency departments at higher levels with more emergency physicians, so this would be a continuation of that.
And just one point of clarification on the request. With the clarification that the MCO tax is good through the 2026, so that covers us for the first half of this budget year, the budget request would actually be $50,000,000 which would be for the '7, where there is no MCO tax.
Speaker 1
So, are you adjusting it to $50,000,000 because the MCO tax is going all the way to December 31?
Speaker 29
Doctor. To the point that the department submits the SPAs to allow us to receive that reimbursement, which they haven't done yet, but they have indicated that they will, then it would be adjusted to $50,000,000 then it would just be for the other '20 the '27. But if, by some miracle, there's an MCO tax that comes together for 'twenty seven moving forward, that would include those funds, then that's kind of how it's worked the press three years. It's been an MCO tax fill the whole way through.
Speaker 30
Kelly Good afternoon, Chair and staff. Kelly Larue here on behalf of Eli Lilly. We appreciate the opportunity to comment as you consider the path forward for Medi Cal. Obesity is a chronic disease with significant health and economic impacts in California. GLP-one medications are effective tools that can help reduce long term disease burden.
The impact of these tools can be even greater when access is not tied to income. Under new federal pricing guidance, there are lower cost pathways that California can leverage to expand access while managing the fiscal impact. Increased access will help address disparities in obesity burden. California's Medi Cal population is disproportionately black, Latino, and rural. A Medi Cal coverage policy for chronic weight management that balances clinical rigor with equitable access supports improved health outcomes and long term savings for the state.
Lilly supports reopening the conversation about GLP -one coverage for chronic weight management in Medi Cal. We recognize California faces serious budget pressures, which is why we're excited about the opportunity for cost savings presented by the balanced model. Thank you. Thanks, Kelly.
Speaker 31
TIFFANY Do you? TIFFANY Really nice. TIFFANY I thought you might, Madam Chair, just for you today. I'm TIFFANY SEIU California on behalf of the California Labor Management Coalition for Quality Care, a coalition of over 20,000 skilled nursing facility workers represented by SEIU twenty fifteen, which you have in the room with you here today, and 21 reasonable California SNF operators covering over 500 facilities or more than half of all SNFs in the state. We are opposed to the DHCS trailer bill related to SNF financing reform unless it has included the restoration of the WQIP.
We appreciate the discussion on the item today. Just want to clarify that the 3% that you guys were talking about does not go to the workforce. The beauty of the WQIP is that it directly and many times, and oftentimes, it goes directly to the workforce, which we all know is the backbone of the facilities, and it's the true way to ensure quality care in facilities. Thank you. Thank you.
Speaker 32
Thank you, Madam Chair. Eduardo Martinez here on a couple of items. First, on behalf of AltiMed PACE, we support the item for investment that was referenced earlier around nurse evaluators. That's one of the biggest barriers to getting seniors who are frail, keeping them in their homes and getting them enrolled in our program. Also, on behalf of AltiMed, we support the request from the CPCA to restore or delay the cuts to the PPS rate for the UAS population, which, of course, we think is going to be critical as some of the changes around HR1 and state budget cuts maybe go into effect.
We need to be there to be able to provide for this population. Lastly, on behalf of Western Dental, which is the largest provider of Medi Cal dental services California, here to speak in support of a restoration of cuts to Proposition 56, dental payments, which is a critical tool to maintain access to care in Medi Cal. Before Prop. 56, there were it was widely considered a failure. There were too few providers and too many patients going without care.
Prop. 56 really helped turn that around and expanded provider participation and access throughout the state. We believe that eliminating these payments would reverse that progress, and it won't reduce costs. It will just shift them. According to a recent study by HCAI, when patients lose access to preventive dental care, they end up in emergency rooms with higher costs and worse outcomes.
Speaker 33
Hello, thank you. I'm Debra Payne. I'm past chair of the Medi Cal Dental Advisory Committee. We have been meeting since 2012. We were put into existence through the legislature.
And I'm also a consultant for First Five Sacramento on oral health issues. And the answer you know, we have about 100 people at our meetings, not only Sacramento County, but through the state. They come in on Zoom. And we have heard, because of Prop 56, about half of the Medi Cal dentals will go away. We know this will impact emergency rooms.
That is not the place to go for dental care, of course. You only get antibiotics and pain medication. It still doesn't fix the issues. Emergency rooms are already overrun. We'll go back to pre Prop.
56, when it was so difficult to get an appointment. We help families. We help children. Children can't arrive at school ready to learn if they have a swollen cheek because of mouth pain. So we really, really would like to see Prop 56 stay.
And so that we all the work that we've done over time to increase the number of providers because of Prop 56, that that stays. Thank you so much.
Speaker 34
Afternoon, Madam Chair. Eric Dowdy with the California Dental Association. CDA, along with its 100 plus members of our Save Our Dental Coalition, urged the subcommittee to protect the Prop. Six supplemental payments for Medi Cal Dental. This $311,000,000 cut would leave $517,000,000 in federal funds on the table, decimate the provider network, and severely curtail patient access, and place additional strain on our already overburdened emergency rooms.
We have heard from our members who have been close to this issue. We'll have to close clinics in their communities where a few other alternatives exist. They'd have to shutter plans to build specialty clinics for special health care needs populations and cut off access for regional center clients. In CDA's survey of 1,500 dentists, we found that over half would disenroll from Medi Cal dental program if these cuts were allowed to go into effect, and another onethree would see fewer Medi Cal patients. Further, as the LAO notes, this cut would have to be subject to federal review by CMS to ensure access to services would remain sufficient even after reducing rates.
We believe that based on our survey results, access would be significantly reduced and may fail this federal review. So, we respectfully urge your support in protecting Medi Cal Dental.
Speaker 35
Madam Chair, Gary Cooper representing the California Academy of General Dentists. They specifically represent the general dentists in the state of California. And of utmost importance to CAGD is the Medi Cal cuts for the dental program. As has been noted many times, one third of the California population is on Medi Cal. And this would be very detrimental to the communities, to the oral health of the communities.
And so basically, we, like other dental groups, are asking you to reject Medi Cal dental cuts when it comes before the committee. Thank you, Madam Chair.
Speaker 36
Good afternoon, Madam Chair. Cleo Bluethenthal with the California Community Foundation, here in partnership with the Fight for Our Health Coalition. Our state's most vulnerable are relying on us to find sustainable long term revenue solutions to fund Medi Cal for all Californians. Because of HR one, health care for millions of California's working people and vulnerable families are in jeopardy. They'll be forced to choose between paying for rent, food, and going to the doctor.
Meanwhile, corporations are set to reap record windfalls. Many Californians who benefit or who stand to lose their health care coverage from HR1 are working for the same corporations that will benefit from Trump tax breaks to the tune of $900,000,000,000 over the next decade, funds, funded by the biggest cuts to health care in a generation. Rather than continuing to allow corporations to shift the responsibility onto everyday workers and the state, we urge you to hold corporations accountable and identify long term revenue solutions that are needed to keep Californians covered. Thank you. Thank you.
Speaker 37
Good afternoon, Madam Chair. Mandy Isaacsley here on behalf of the California Primary Care Association, the statewide organization representing our community health clinics. I want to thank the committee for including our proposal to delay the PPS cuts to the state only Medi Cal populations, including those in the UIS. I don't need explain to you how devastating this cut will be, Madam Chair. I think you well understand it.
But just as a point of reference, one of our member clinics in L. A. County informed us that this cut will represents a 40% hit on their operating budget. I don't need to explain to you guys reduction in hours, staff reductions, potential closures will ensue if this moves forward. So we very much appreciate the inclusion of this in the proposals for investment and look forward to future conversations.
Thank you, Mandy.
Speaker 12
Good afternoon, Mr. Chair and staff. I'm Antonio Pavros. I work twenty years as a restorative nursing assistant in one of the facilities in Marin County. As a direct contact to the patient, I really want to reinstate the funding for WKIP for not to impact the quality of work.
Thank you very much.
Speaker 38
you, Madam Chair. Megan Subers, on behalf of the California Professional Firefighters, and would like to urge your support for the investment proposal listed to provide $1,000,000 to DHCS to implement the provisions of SB eleven eighty by Senator Ashby. This would provide for Medi Cal reimbursement for community paramedicine triage alternate destination and mobile integrated health programs on the Medi Cal side, which is already required on the private pay side. This resource allocation would allow for DHCS to seek the federal approval that is required under the statute, and really think those programs have shown value and would urge your support. And on behalf of the Los Angeles LGBT Center, also would like to see a delay in the proposed PPS cuts for the UIS population.
Thank you.
Speaker 38
Correct, On the Medi Cal side. So the provisions of the bill were automatically effective as of July on the private pay side. But for the Medi Cal side, that portion was contingent upon appropriation to get federal approval.
Speaker 40
Hi. My name is Kristen Mosak. I have been a CNA for twenty three years. Currently, I work at the Pines at Placerville Health Care with PACS, third company I have worked since 2003. I oppose the governor's nursing home rate reform proposal unless it's full fully restores the WQIP.
I believe the WQIP needs to be reinstated. It benefits the residents and operators and workers based on the quality care in nursing homes. Without this funding, I believe the quality care will decline. Thank you.
Speaker 41
Good afternoon, chair. Hi. My name is Carol Ruiz Driver. I work in the activities department for nineteen years at a nursing home in Santa Clara. Please restore the W equip.
Benefits the residents and the workers, and thank you for your work in helping us today. Thank you. Thank you, ma'am.
Speaker 42
Good afternoon, Madam Chair. Yvonne Chung, representing the California Association of Health Facilities and our over 900 skilled nursing providers, as well as the Support Skilled Nursing Patients Coalition, a coalition of over 20 organizations. We're here today to oppose the reauthorization of the SNF funding methodology unless the funding for the WQIP is restored. As you've heard today, this is a critical program to support staff and the workforce so that they can continue to provide high quality care for the most vulnerable and disabled residents California. And we appreciate your comments today in support of that.
Thank you. Thank you.
Speaker 43
Good morning, Madam. My name is Verna White. I'm a CNA. I've been working at a facility for fifteen years. I ask that you guys keep the WQIP in the program because it is an incentive for us.
We look forward to that bonus at the end of the year because we are the essential workers that's directly giving hands on care to the patient in order to pass that survey. That's what we look forward to. Thank you.
Speaker 44
Doctor. My name is Carol Silva. I've been working over thirty years as a CNA and I for Sacramento County. And I want for WQIP.
Speaker 44
The WQIP. I can't even pronounce it. To keep for you to keep it because we need it. And also, I'm asking for, you know, like, the help. So we need more staffing and for to give better care to the patients.
And that's it. Okay. Thank you.
Speaker 17
Good afternoon, chair and staff. My name is Austin Bradley. I'm the director of nursing at Merced Behavioral Center and educational chair for CAF's Progress Valley Chapter representing skilled nursing facilities in Merced, Tuolumne, and Stanislaus County. But most importantly, I'm a mental health advocate with nearly twenty years of experience. I, like many others, you will hear today oppose the current budget trailer bill unless it is amended to restore WQIP funding.
In California SNFs and healthcare facilities, we are already seeing patient occupancy rates return to pre COVID levels, but we are still short roughly 22,000 healthcare workers compared to the same time period. At the same time, throughout SNFs and healthcare facilities, we are seeing an increase in patient acuity, including more individuals with complex mental health needs. WQIP is critical in helping facilities rebuild the workforce and provide and support behavioral health education, which is essential for the safety and caring of these patients. So, as a result, I respectfully urge restoration of this funding. Thank you.
Speaker 1
Hi. My name is Veronica Chavez. I work for twenty years as a restorative nurse assistant in the San Joaquin County. I want you to help us to restate the w equip that we need to support the welfare of the residents and staff. Thank you.
Thank you.
Speaker 45
to bring that down. Good afternoon, Chair. Katie Rodriguez with the California Association of Public Hospitals, here in support of the $500,000,000 ask for public hospital systems. To supplement low medical base rates that are not currently covering the cost of care, public hospital systems put up non federal share in place of the state to draw down federal funding through supplemental payments, like the state directed payments, which I know was discussed earlier. In total, public hospital systems are now putting up $4,000,000,000 annually in non federal share to draw down federal funding.
As mentioned earlier, H. One will significantly reduce state directed payments. In total, public hospital systems are facing a loss of $3,400,000,000 annually from HR1. As you heard last week, public hospital systems are doing everything they can to maintain access to care, but they cannot absorb the scale of cuts, and we are facing losses in services, likely facility closures, and layoffs. Public hospital systems also put up the nonfederal share for inpatient fee for service rates.
The $500,000,000 appropriated for public hospital systems would address a structural inequity it is an important first step towards stability for public hospitals. We urge your support. Also, we urge the support of the restoration of the PPS rates for FQHCs for the UIS population. Public hospitals have 100 FQHCs across the membership and are facing millions in dollars in cuts from that as well. And that, combined with HR1, is going to be very challenging to navigate.
Thank you.
Speaker 1
So you all put up $4,000,000,000 annually, and you're asking for $500,000,000 just to offset part of that?
Speaker 45
That's correct. Okay. Thank you. A down payment, hopefully, for the future. Thank you.
Speaker 46
Good afternoon, Madam Chair. Andrew Guillo, UC Davis Health, government relations. I'm here in support of CAPH's request for $500,000,000 general fund as the region's safety net hospital and public hospital for the capital. We are in strong support of that. Thank you.
Thank you.
Speaker 26
Kelly Brooks. I'm here on behalf of two clients. First, on behalf of the Center for Elders Independence, which is a PACE site in Alameda and Contra Costa Counties. We're here in support of the Cal PACE proposal. When level of care nursing determinations are delayed due to staff constraints, there are real consequences to patients, including health deterioration or institutionalization.
Second, on behalf of lifelong medical care, a community health center that serves over 50,000 patients annually in Alameda and Contra Costa Counties, we support the CPCA proposal to delay the $1,000,000,000 in cuts to the PPS system for the UIS population. The PPS cuts would have significant impact on our mission to provide high quality medical, dental, and behavioral health care to our community. Thank you.
Speaker 6
Good afternoon, Madam Chair and staff. First of all, thank you for your close attention to these very complex and difficult issues. My name is Jennifer Moore Ballantyne. I am CEO of the Coalition for Compassionate Care of California. We are a cross sector coalition, working to improve care for people with serious illness across the state, many of whom reside in or are cared for in skilled nursing facilities.
On behalf of our board of directors and our nearly 100 organizational members, I oppose the current budget trailer bill language unless it is amended to restore the WQIP funding. Thank you.
Speaker 2
Good afternoon, Madam Chair. Connie Delgado, on behalf of two clients today for two different issues. On behalf of PointClickCare, we're here in opposition, unless amended, to restore the funding for the WQIP. On behalf of the District Hospital Leadership Forum, these are the 33 district and municipal hospitals, we want to thank you for the discussion on the various hospital financing mechanisms. These programs are critical to the survival of district and municipal hospitals.
As a reminder, these hospitals are located in some of the most rural communities in this state. We know that the impact under HR1 is going to be significant for these hospitals, and they are often the only providers of care in their community. With respect to item seven on the value based program, we do have concerns that it could add additional risks, and we would like to partner with DHCS and all stakeholders to ensure that the voice of district hospitals are heard. And lastly, we want to thank you for the support and of the BCP in implementing SB246. This was graduate medical education at district hospitals.
Thank you. Thank you.
Speaker 47
Good afternoon, Madam Chair and Committee. My name is Jeff Jamieson. I'm a regional vice president with PACS Health Care. We have 136 facilities throughout the state of California with about 40,000 employees. We take care of about 16,000 patients.
And like many others, I impose the current budget trailer bill language unless it is amended to include restoration of funding for the WQIP program. WQIP doesn't just give money to the facilities. It's a program that has to be achieved and earned. It aligns that funding with measurable improvements with staffing and with patient care. Thank you.
Thank you.
Speaker 48
Good afternoon, Madam Chair. George Cruz, on behalf of the California Behavioral Health Association. Just want to highlight two urgent concerns. First, the loss of the MCO tax will continue to strain the behavioral health system. Providers are already concerned about reduced capacity, increased workforce strains, and longer wait times for individuals seeking care as funding becomes more uncertain.
Second, are deeply concerned about the coverage losses for undocumented populations. This population already faces significant barriers to care and are more likely to experience serious mental health needs, substance use challenges, and housing stability, and the loss of coverage will delay care, worsen health outcomes, and increase the likelihood of crisis. We also support CPCA's efforts to address the strain placed on clinics due to the federal challenges as the impacts are being felt across the safety net. We urge the legislature to prioritize protecting access to care, preserving coverage, and stabilizing the system. Thank you so much.
Thank you.
Speaker 8
Good afternoon, Madam Chair and Staff. My name is Emily Shields. I'm the Director of Nursing from Pine Creek Care Center in Roseville. I oppose the current budget trailer bill language, unless it is amended to include a restoration of funding for the Workforce and Quality Incentive Program. Thank you.
Speaker 49
Good afternoon. Mark Fruke, on behalf of the California Hospital Association. CHA is with the other comments to support the restoration of the HQIP program. I would also add a comment related to the discussion related to Prop 35, the MCO tax. We are concerned that there may be an effort by the administration to sweep the remaining funds in that program, rather than dedicate those funds to providers.
Thank
Speaker 50
Thank you, Madam Chair and staff. I appreciate your comments earlier in regards to the WQIP program. My name is Casey Calloway, from Folsom Care Center. We are a family owned and operated facility with more than 140 employees and care for 99 residents and 70% of them being, Medi Cal patients. And we want to strongly oppose the current budget trailer bill, and the language amended, and hope for the restoration of the W.
Cook program. And again, I appreciate your comments earlier today.
Speaker 14
Hello. Nisette Short on behalf of Loma Linda University Health, here to support the PACE budget request. This proposal will improve access to community based care for our medically fragile elderly patients in our communities, which not only has proven to help and support their well-being, but it also improved access to the rest of our healthcare delivery system in this really critical time for our safety net. Loma Linda also wants to align our comments with the other stakeholders who have concerns and opposed the cuts to the dental program. Thank you.
Good
Speaker 51
afternoon, Madam Chair. Jack Anderson with CHIAC, representing our local health departments throughout the state, commenting on issue number three under DHCS related to the family health estimates. Thank you for your questions about county funding for the California Children's Services Program serving the most medically complex and vulnerable children and youth in the state. We did want to clarify that counties are not asking for a funding augmentation because of increased county costs. Instead, counties are asking the state to pay counties what they are owed based on DHCS's own existing staffing standards and caseload.
Just a quick simple example to illustrate the issue. DHCS staffing standards indicate that counties should receive $200 for the caseload that they serve, but DHCS has this information, but instead only provides counties $100 And not because the staffing standard is wrong and not because the funding is not needed, but because the administration simply will not include the full dollar amount in the budget proposal. Because of this issue, in the current year, DHCS allocations are $109,000,000 below what counties should receive. Budget year allocations will similarly be less than what is needed due to this issue. This underfunding contributes to delays in county eligibility determinations and annual redeterminations, service authorizations, medical therapy services, and ultimately access to lifesaving specialty medical services for CCS children.
CHIAC respectfully requests the legislature to provide sufficient funding to county CCS programs in alignment with CCS caseload and DHCS staffing standards. Thank you. Thank you.
Speaker 52
Hello, Madam Chair and staff. My name is Jill Miller. I'm a registered dietitian representing the California Academy of Nutrition and Dietetics. We have over 3,000 members in the state of California, and there's over 11,000 dietitians in the state of California that work in health care. We are here to also oppose the current budget trailer bill language, unless amended, to include restoration of workforce funding.
Registered dietitians and NDTRs are a critical part of nutrition staff and services, and also included within those workforce challenges.
Speaker 53
Hello, Chair. My name is Laura Marcus, and I serve as CEO of Dientes Community Dental Care, serving Santa Cruz County, where we see 18,000 patients each year, the majority of them Medi Cal. This is actually my first Senate budget subcommittee hearing. It's been quite an education, despite being in my role for twenty years. I've been busy doing the work on the ground at home.
And now I'm excited to get more engaged at the state level. I'm here to respectfully
Speaker 53
I'm here today to respectfully urge you to prevent the elimination of full scope adult dental benefits in Medi Cal for the UIS population. I'm actually disappointed I haven't heard more of our audience speak to this. While the cuts to PPS reimbursements and Prop 56 dental provider rate funding will also impact us, it's the benefits for UIS population that it's just not logical. I was leading Dientes when California eliminated adult dental benefits for Medi Cal adults in 2009, and I saw firsthand the impacts on our patients. But it also didn't save the state money.
A 2025 policy analysis from the American Dental Association estimates that eliminating adult dental benefits for The U. S. Population alone would cost California roughly $400,000,000 over five years. And that's due to increased emergency department visits, higher medical costs associated with untreated oral disease, etcetera. This practically eliminates the budget's planned savings.
I have to believe the state can find $40,000,000 to save this important benefit. Dental services for low income people are getting cut from so many directions. Please protect Medi Cal dental benefits for UIS populations, but also maintain Proposition 56 provider funding, and look at that PPS reimbursement for health centers, as we will be failing across the system if we don't do all three.
Speaker 1
It was talked about last week's in last week's session, that's UIS. Yes, the UIS Dental.
Speaker 54
Thank you, Madam Chair. Jean Hurst here today on behalf of the University of California. First, we want to share our strong support for the public hospital budget request of $500,000,000 Second, regarding provider taxes, UC Health would like to express appreciation for the $75,000,000 in MCO tax funding for graduate medical education that was released to UC in 2025. These funds are supporting 200 medical resident and fellowship positions in 162 different GME programs across the state, as well as direct technical assistance to MGE native health systems. Support for GME will only become more critical as HR1 student loan caps begin to exacerbate the physician workforce shortage.
UC Health also supports the administration's MCO tax spending plan for 2025 and 'twenty six. Finally, regarding Prop 56 Dental, UC Health supports CDA's request to reject the planned elimination of Prop 56 Dental payment rates. UC's School of Dentistry, located at UCSF and UCLA, are key providers in California's Medi Cal dental safety net serving children, older adults, people with disabilities, medically complex patients, and underserved families. The elimination of the Prop 56 rates would impact critical services, including pediatrics, hospital dentistry, oral surgery, orthodontics, endodontics, and special needs care.
Speaker 55
afternoon. Josh Gogger on behalf of the urban counties of California and the Los Angeles, Riverside, And Ventura County Boards Of Supervisors. Here in support of the $500,000,000 public hospitals request in the agenda, 10 of the 14 urban county members own and operate hospitals, including the three mentioned, providing access to essential services for Medi Cal and uninsured patients. With the changes in HR1 public hospital systems, which include county hospitals, estimate $3,400,000,000 in total annual losses from HR1 when fully implemented. Without investments from the state, California's county hospital system will be unable to sustain current care levels.
The consequences will include reduced access to services, increased wait times, staff layoffs, and possibly even facility closures, which we are already seeing. The CAPH proposal will bring parity to the financing mechanism for Medi Cal patients, fee for service, and is a down payment to help public hospitals sustain their essential work in the health care delivery system. Lastly, counties will also need resources to restart indigent programs, the eligibility work, and behavioral health to help blunt the HR1 impacts. Thank you very much. Thank you.
Speaker 18
Madam Chair, I'm Erin Evans on behalf of the County of Santa Clara. We appreciate the attention this committee has paid to the needs of public hospitals and our residents as we all grapple with the impacts of HR1. The county operates the second largest public hospital system in the state, with four public hospitals and 15 health centers. We also operate trauma, burn, and rehabilitation centers that serve residents regionally. Once all the changes within HR1 are implemented, our county anticipates a billion dollar loss.
We're doing all we can locally. We have passed a local sales tax measure. Our community, our Board of Supervisors, excuse me, implemented $200,000,000 of midyear cuts to the health care system. But we just can't do it alone. So we're here seeking partnership with the state.
As my colleague before me mentioned, we very strongly support the $500,000,000 request from the California Public Hospital systems as sort of one of the down payments to help mitigate the impacts of HR1. Thank you.
Speaker 45
Good afternoon, and happy almost spring break. I'm Darby Kernan. On behalf of Leading Age California, we represent nonprofit providers of care services and housing for older adults, including SNFs. We are requesting you to restore the WQIP for SNFs and associate our comments with everyone else that presented earlier. Thank you.
Speaker 56
Hi, Madam Chair. Kendra Matthews with Flagstone Healthcare. We have 93 skilled nursing facilities we support in California, and we're so grateful that you're taking the time on our industry. So thank you. We are here in support of rein reinstating WQIP.
No, it's a $150,000,000 savings to California. It's federally matched, so we're losing 300,000,000 overall. And this money really does go straight to our employees and our staff to help recruit them, retrain them, and just that all adds to the improved quality of care.
Speaker 39
Hello, there. My name is Frances. I am the marketing director with Blackstone Health Care, I want to keep it short and sweet. I oppose current budget trailer bill language unless it is amended to include a restoration of funding for the Workforce and Quality Incentive Program. Everybody deserves quality care.
This is why it matters to me and my communities. I love my patients. They deserve the best. Thank Good
Speaker 57
afternoon, Madam Chair and Staffer. Thanks for the opportunity to speak with you today. My name's Eric. I'm an administrator for Flagstone Healthcare. I'm one of the 1,200 administrators in California that would be in deep trouble without the WQIP program.
I used that money to pay for many of the CNAs that you saw come up front. If I didn't have that money, I'd have fewer staff. Without those staff, we'd have more patients going back to the hospital and costing the state an untold amount of money to do that. Thank you.
Speaker 58
Good afternoon, madam chair. Jessica Moran with Capital Advocacy. I have a few items to comment on. So, on issue number eight, on behalf of the California Association for Nurse Practitioners and the Occupational Therapy Association of California, we would support an amendment to the department's trailer bill language related to the skilled nursing facility financing that restores the WQIP. These payments are necessary to support important therapy and nursing services that are happening in skilled nursing facilities.
On issue number 11, on behalf of WellBe Health, we support the proposal that was presented here today, the staffing request for critical nursing evaluators who are evaluating applications for older Californians who are enrolling in PACE. And lastly, on behalf of the Association of Dental Service Organizations and Golden Age Dental Care, urging the legislature to reject the plan elimination of Prop 56 dental funding. Appreciate your comments at the beginning this morning, Chair. Thank you. Looking forward to
Speaker 59
Thanks. My name is Christine Smith with Health Access California. I just appreciate the opportunity for my boss to be on one of the panels today I did want to note that our state's most vulnerable are relying on us to find sustainable long term revenue solutions to fund Medi Cal
Speaker 59
Californians. I know you know about the impacts of HR one, but people will be forced to choose between rent, food, and going to the doctor. Meanwhile, corporations are set to reap record windfalls. Rather than continuing to allow corporations to shift their responsibility onto everyday workers in the state, We urge you to hold corporations accountable and identify long term revenue solutions needed to keep Californians covered. We also appreciate your attention to the Health Care Affordability Reserve Fund loan that is being repaid and how it could help people afford care.
Thank you. Doctor.
Speaker 15
Madam Chair, Kathy Mossberg with APLA Health. I want to align ourselves with our colleagues in support of the restoration of the PPS reimbursement to health centers that serve all people regardless of immigration status. Without this PPS rate, we are certainly not going to be able to sustain our current level of service. As an L. A.-based provider, cutting PPS to UIS population will further tear the safety net further than what we're already seeing happen with H.
R. I. We hope this committee will restore this when the time is appropriate. Thank you
Speaker 60
Good afternoon. Katie Layton on behalf of the Children's Specialty Care Coalition, here to comment on how changes to Medicaid financing will impact pediatric specialists who care for children and youth with complex health care needs. There's a looming workforce crisis within pediatric specialty care, in large part due to high Medi Cal volume, upwards of seventy percent at some of the largest children's hospitals in the state, and chronically low Medi Cal rates. These physicians undergo years of additional training, yet earn markedly less than their adult counterparts. And a number of pediatric specialty fellowship slots are either at or below 50% filled, and this is causing delays in accessing care.
Programs like loan repayment under Prop 56 have served as a lifeline to support this pipeline of physicians, and Prop 35 provided a pathway to finally bring Medi Cal specialty care rates closer to parity with Medicare. However, changes to Medicaid financing under HR1 will harm this network. To date, specialty care rate increases for twenty twenty five-twenty six have not materialized. We ask, at minimum, that the state protect current Medi Cal rates, and we appreciate DHCS's commitment to thinking creatively around maximizing future MCO tax revenue to the extent possible. And lastly, just wanted to align our comments with those opposed to the dental cuts as well.
Thank you, madam. Thank you.
Speaker 61
Afternoon, madam chair and staff. My name is Velma Bocanegra. I work for a nonprofit organization called Ijaz El Campo, where we service our hardworking field workers. And I'm here in partnership with Fight for Our Health Coalition. Our state's most vulnerable are relying for the state to fund long term revenue resolutions to fund Medi Cal for all Californians.
Due to the passing of HR one, millions of Californians, working people and vulnerable families are in jeopardy, while many of them will have to be forced to choose between rent, food, or doctor visits. While corporations are benefiting from the tax cuts that were in place by the current president. Many Californians are working for these corporations as well, and we are urging that you hold them accountable. Along with this urge is also to stop any additional cuts to Medi Cal dental coverage, as oral health is physical health. It should not only be funded for emergencies when it is too late when preventative care can be given.
Thank you. Thank you.
Speaker 62
Afternoon, Madam Chair. Omar Altamimi with the California Panethnic Health Network. You know, as we know, H. R. One state cuts have really impacted our most vulnerable communities.
The legislature voted last year to eliminate adult dental benefits for 2,100,000 immigrants, including undocumented immigrants, well as lawfully present immigrants starting in July 2026. California has done this before. In 2008, the California legislature voted to eliminate adult dental benefits. And it spent nearly a decade to restore them. During that time, many people were forced to stop seeking oral health care, which allowed preventable conditions to worsen and push people into more costly emergency situations.
This time is no different. You know, people will delay seeking care until it becomes an emergency, which leads towards oral health outcomes for our most vulnerable communities. Following the 2008 elimination of adult dental benefits in 2009, the average cost for dental related emergency department visits increased by 68%. In recent years, costs for emergency department related dental visits have increased from $3,000,000,000 in 2020 to $3,900,000,000 in 2022. We know that the elimination of adult dental benefits will further exacerbate the unaffordability crisis we're experiencing in our state.
As we're considering investments in Medi Cal, we should prioritize maintaining access to essential benefits for patients, joining calls to raise revenue as well, in a way that, you know, truly reflects California's values by raising revenues from corporations and the wealthy Thank you. Rather than squeezing dollars from our most vulnerable communities. Thank you. Thank
Speaker 22
you, Madam Chair. Excuse me. Cathy Sunderley McDonald, here for two clients today, first for Habitat Health, a PACE organization with sites in Sacramento and Los Angeles Counties. We support the Cal PACE Nursing Evaluator funding request and believe it will be a helpful resource for the department, both during the moratorium and beyond. Every delay in a level of care determination represents an elder Medi Cal recipient with high level needs who has both elected that care and is not currently getting the coordinated and comprehensive care they need.
Thank you for your consideration of this.
Speaker 22
For the California Panethnic Health Network, specifically related to the California Health Benefit Exchange, Californians are feeling the impact of the GOP's failure to extend the enhanced premium subsidies. We see that with the impacts on new enrollment, which is down 32%, with Latino and black or African American individuals most impacted. But we see that while new enrollment is down, the majority of enrollments held steady, particularly for those below 200% of the FPL. This is a direct result of last year's HCAR funds, which allowed Covered California to provide state funded tax credits to individuals earning up to 165% of the federal poverty level. It's more urgent than ever that these funds be preserved and maintained so we can continue to mitigate current and future coverage losses.
And finally, we strongly support annual funding so qualified health plans can continue to provide gender affirming care to their enrollees. Thank you. Thank you.
Speaker 63
Good afternoon, Madam Chair. My name is Mina Ramachandran. I'm an operating leader at SCENE Health PACE in beautiful San Gabriel Valley, close to nowhere you hail from. I'm here to support Cal PACE's budget request for additional nursing support. Much has been said by my colleagues around the impact of delays in PACE enrollment on seniors, but I also wanted to highlight the delay impact on caregivers.
It's often family members who will step up and bear the additional stress when their seniors' love and loved ones are in crisis and have delays in enrollment. And so, we want to highlight that addressing this need will not only benefit seniors but the entire system and ensure families are able to provide the care that they need for their loved ones. Thank you very much for your time.
Speaker 64
Afternoon, Madam Chair. Megan Allred on behalf of San Diego PACE, St. Paul's PACE, and Cal Optima Health, in support of the level of care nursing staff for PACE and passing along our gratitude to Senator Groff for sponsoring the Senate proposal, and also on behalf of San Isidro Health to support the proposal to delay cuts to the prospective payment system for UIS populations. Thank you.
Speaker 24
Good afternoon, Madam Chair and Assembly. My name is Rob Mathuni. I run dental services company, statewide California. We primarily serve Medi Cal dental patients in long term care facilities, specifically SNFs. And I want to give voice to the segment of population I think might be a little bit overlooked, is the frail, elderly residing in these SNFs.
We talk about the alternative to not bringing the services, not having the providers, is the patients going to ERs. It's not really an available option in a lot of cases to the SNF patients. We go on-site, treat them bedside, and a question was raised about the availability of dentists. I can assure you that they'll fall off the cliff. It was a problem, a large problem before prop 56 came into effect.
And just think about the, just the explosion of costs since, 2018, 2017 to today with standard of living. And I could tell you I can't pay my my doctors, what they demand today for compensation. So these patients will not be served, and that'll leave lead to serious compounding health risks and dignity, quality of life, if nothing else.
Speaker 65
Madam Chair, Rand Martin. And this is not my first sub three hearing, but I still do learn a lot. I'm here on behalf of Aviana Healthcare as well as Maxim Healthcare and Prime Home Health in support of the 40% Medi Cal rate increase for private duty nursing. I want to point out two things that remain the same over the four years since we first went down this path. Number one is that the ask has remained exactly the same.
It's about a $62,000,000 request over a full year. The second thing is that there are hundreds of kids who are still being authorized for these services but are not receiving them because there's just not enough people out there. There is one thing that has changed over the four years, and that is hospital costs continue to rise. Just last year, 7.5%, according to the American Hospital Association. Our costs remain the same.
So the savings to the state pegged three years ago at $175,000,000 is much, much larger now. So we really hope that you will support it, and we appreciate your longstanding help on this issue. Thank you.
Speaker 66
Good afternoon. My name is Pat Hornbecker. I'm president of The Arc of California, representing five hundred thousand people with developmental disabilities in California. I'm also a retired dental hygienist. And I worked for thirty five years in San Francisco.
And I have to echo the comments on Denical and the fact that I worked for my father and my brother in dentistry, I can only echo how much they did not find an inability to serve Medi Cal patients under the system as it exists. But they did do a lot of pro bono work. Did it just because it's the only way to get around the system, and to actually make it worth their time and energy to do. My son is a kid with severe disabilities, and recently had a four year wait for services. Four years for the UOP to be able to operate on him.
He lost nine teeth, had eight fillings, and gum surgery. This is not the way we should run our businesses, and it's not the way we want to run our practices. And these proposed cuts are going to reduce access. Thank you, ma'am.
Speaker 67
Thank you for the time, Madam Chair. My name is Aaron Elder, and I'm the CEO of Sola Kids Dental. We're a three location dental practice serving primarily ninety percent of our patients are on Medicaid in South L. A. We serve 7,005 patients a year, and I just wanted to tell a little bit of our story because I think it's really representative of the vast majority of dental coverage for patients on Medi Cal, especially kids.
We have about 15% net income margin, or EBITDA margins, before debt service. And Prop. 56 funding represents 27% of our reimbursement. So a 27% reduction to price would flow through to having basically negative 10% to 12%, net income at the end of the year. We can't sustain a business that way, and we would just have to close.
And we don't really have anywhere to squeeze. We have 30 employees that serve those 7,005 patients. And I think, you know, there's nothing really unique about our cost structure or financials, and I think a lot of other practices are in that same position. So I just wanted to share those numbers and hopefully help as you and the rest of the Senate and Assembly think through funding.
Speaker 68
Good afternoon, Madam Chair. My name is Emma Gonzalez with the California Hispanic Chambers of Commerce, and we respectfully ask the committee to restore medical dental services for state's more most burnable population or children. While we understand the need for fiscal discipline, these cuts jeopardize hundreds of millions in federal matching funds. Not only do those that need the services the most lose out, but the state also loses considerable federal funding. We hope you will consider these cuts.
Thank you. Thank you.
Speaker 69
Afternoon, Madam Chair and staff. My name is Estea Kessler. I'm a school board member representing the Central Valley Latino Mayors and elected officials. And here to tell you that a toothache is one of the leading causes of preventable preventable school absences. And where I come from, the Central Valley, children are underserved and are more likely to delay care until problems become severe because access is limited.
Preventative care keeps children healthy in school and able to focus on learning. So let's restart the dental. Thank you Good for
Speaker 23
afternoon, Madam Chair. My name is Doug Kessler, represent two groups. The cent Central Valley and Northern Yemenese Society and Cece Puede, Fresno, Tulare, Kings, and Kern Counties. I we work in very, very rural areas where the kids have just recently been going to dentists for the first time. And the loss of this isn't that the 30 miles that they go to the dentist or the 40 miles to go to the dentist.
They're just not going
Speaker 9
Madam Chair, Nick Luizos, behalf of the California Association of Health Plans. As discussed earlier, the future of provider taxes in California is at a crossroads due to H. R. One and recent federal guidance. CAP, the R Association, has historically supported an MCO tax, but that support was rooted in three key principles.
Number one, that the tax be affordable to purchasers of health care in the individual and employer markets. Number two, that the revenue generated from the tax be used to enhance the Medi Cal program and not just serve as a general fund backfill. And number three, that the tax is fair, equitable, and stable amongst the taxpayers. So, in light of that, we ask that, if there are discussions around the MCO tax, that cap is an integral part of those discussions, that the legislature be thoughtful and deliberate, and that affordability be a key consideration in any discussions. Thank you.
Speaker 70
Madam Chair, thank you very much. Chris Scroggin with Capital Advocacy on behalf of Big Smiles and Children's Choice Dental Care. I just want to echo the comments of past speakers on the importance of the restoration of the Proposition 56 funding for Medi Cal Dental. Since the passage of Prop 56, we've seen a tremendous increase in the number of providers accepting Medi patients and meeting the needs of this critical population. And with these cuts, we run the risk of losing all that progress.
So, we urge legislature to restore those cuts. Thank you.
Speaker 71
Good afternoon. Alexis Rodriguez with the California Chamber of Commerce. I want to begin by thanking you for today's discussion. While the goal of expanding access to health care is one we all share imposing penalties on employers for having employees enrolled in Medi Cal may have unintended consequences on California's businesses. As mentioned today, businesses with 50 employees and more, are already required to provide health care coverage, for their full time employees, and California's employers are proud to provide health care coverage for their employees, and we do our best to make it affordable.
Penalizing California's business community may discourage hiring and push employers to limit growth. Rather than imposing these measures, we'd like to focus on collaborative solutions that support employers in offering affordable coverage. Thank you.
Speaker 72
Sean Good afternoon, Madam Chair and staff. My name is Sean Yen. I am with California Coverage and Health Initiatives, and I'm here to support the creation of sustainable long term revenue solutions for Medi Cal, especially those which hold corporations accountable as they receive billions of dollars in tax cuts, which would have gone to assist Medi Cal recipients to begin with. Thank you very much. Thank you.
Speaker 73
Afternoon, Madam Chair and members. My name is Diana Ordaz Charington, and I'm here on behalf of Southern California Health Care Advocacy Coalition. I'm urging you to reconsider the proposed cuts to Medi Cal dental services at a time when families are already stretched by rising costs, Eliminating dental benefits will only deepen health disparities and drive higher medical costs down the line as preventable oral health issues go untreated. These cuts also come with a significant fiscal consequence. California would forfeit hundreds of millions of dollars in matching funds, dollars that help stabilize access to care in the communities that need it the most.
I respectfully ask for you to restore Medi Cal dental benefits and protect access to essential preventative care for our most vulnerable residents. Thank you for your time and consideration.
Speaker 74
Good afternoon, Madam Chair. My name is Roberta Arnold, representing the California Multicultural Business Alliance. We represent over 3,500 small businesses that are minority owned, woman, LGBTQ, and veteran owned. Cuts to the Medi Cal dental coverage will turn an already difficult health care situation into a crisis for many families. We understand tough choices need to be made for the state's budget, but we should not balance the budget by cutting children's dental service.
Dental care is not optional. It's preventative. Health care that keeps small issues from becoming serious, costly emergencies. For a small business owner perspective, this isn't just a health care issue. It's a workplace.
It's a workforce and economic stability issue. When children are in pain or facing untreated infections, parents miss work, productivity drops, and families fall further behind. That impact shows up in our shops, offices, and job sites across California, especially communities already carrying the heaviest burden. If one thing should be spared in this budget, it's funding for our children's health care, starting with the basic services that protect their health, school attendance, and long term being. Thank you.
Thank you.
Speaker 21
Good afternoon, Madam Chair and staff. I'm Naomi Padron on behalf of InnovAge. We'd like to echo the comments made by previous speakers in support of the budget request for $700,000 for foreign nurse positions within the Department of Health Care Services. Thank you.
Speaker 75
Good afternoon, Madam Manjibar and staff member. My name is Nora Kanetti. On behalf of the Latino Business Association, we ask that the committee restore the Medi Cal dental budget and so we protect our children's health always. Thank you, and have a great evening.
Speaker 76
Good afternoon. Nora Angelus with Children Now. The budget projects significant Medi Cal caseload reductions, more than 500,000 fewer enrollees by twenty six-twenty seven, driven by policy changes like stricter eligibility and redetermination requirements. For children, even short gaps in coverage can mean missed checkups, delayed diagnoses, and worsening health outcomes. Families may struggle to enroll or stay enrolled even when eligible because these federal provisions were designed to churn people off coverage and reduce revenues supporting Medi Cal services.
We strongly urge you to protect Medi Cal for children, youth, and their families. And we would like to associate ourselves with the comments of CDA on Prop 56. Thank
Speaker 77
Good afternoon. Beth Nunalski with SCA of California on behalf of our 750,000 members and our Fight for Health Coalition. Really want to appreciate the thoughtful panel today on the intersection between employment, coverage, and Medi Cal. As was noted on the panel, we cannot ignore this intersection and the importance that we are placing on guaranteeing that all workers, especially low wage workers, have access to coverage. And if that's happening through Medi Cal, making sure we're holding accountable the employers that are leading to those workers being on Medi Cal.
So, really encourage your continued deliberations in this space with your fellow members of your Senate. Additionally, I want to align myself with the comments made by the urban counties and the public hospitals in the need for a $500,000,000 really down payment to reinvest in our public hospitals and health systems. Additionally, I want to acknowledge the comments made earlier by my colleague from CHIAC on CCS, and appreciated the conversation on that earlier today. And lastly, as was noted by the UCCs, as we talk about what does the future of Medi Cal look like, who will and will not have coverage. We can't ignore the state of our Intigent Care programs and encourage further deliberations on the need to invest in those programs as well.
Thank you. Thanks, Beth.
Speaker 39
Good afternoon, Chair. Sarah Brennan with Weidmann Group. On behalf of our client, Dentiquest, we urge the committee to reverse the proposed Prop 56 cuts to Dentical providers. These supplemental payments are the difference between providers staying in Medi Cal and leaving it. California spent years rebuilding its dental network after prior underpayment collapse provider participation.
These cuts risk triggering that clasp again. And millions of Medi Cal beneficiaries who finally gained real access to dental care will be the ones who pay the price. Please destroy the funding. Thank you. Thanks.
Speaker 78
Good afternoon, Madam Chair. Chris Bollinger, on behalf of the California Asian Chamber of Commerce and our 700,000 API owned businesses throughout the state. Here to speak to the employer based health care coverage item, we just want to align our position and comments with the California Chamber of Commerce. Thank you so much.
Speaker 79
Hi. Good afternoon, Madam Chair and staff. My name is Julie Sherman. I'm Director of Public Policy for The Arc of California. We represent half a million people with developmental disabilities in this state.
We are here today to urge you to restore the funding for Medi Cal Dental. Right now, it looks as though there is going to be up to $1,000,000,000 hole in the budget. And for a $3,000,000,000 budget, that is extremely significant. I want to talk about how difficult it is for people with intellectual and developmental disabilities see a doctor. Right now, it can take up to two years to see a specialized doctor that can help with the specific needs of people with intellectual and developmental disabilities who have sensory issues and find it difficult to go to a dentist.
That is only going to get much worse. In a recent survey, fifty percent of dentists said that they would no longer accept medical dental or would much reduce services if these cuts go ahead. Thank you. Thank you.
Speaker 80
Thank you, Madam Chair, for a great hearing. Andrew Mendoza on behalf of the Alzheimer's Association. On issue eight, we are concerned with the elimination of the Workforce Quality Incentive Program. We do know that this program supports with the delivery of quality care to, people that are living with Alzheimer's and dementia in these settings. The vast majority do, want to live at age in place and live at home.
But, as the disease progresses and the symptoms become more complicated for fulfilling the activities of daily living, they're definitely needed. So in this setting, we would like to see that restored and appreciate your inquiry about if the program could be extended during these uncertain times, and we support that exploration. So thank you so much. And then we do also appreciate the department speaking about the collaborative efforts on this issue, and we stand ready to provide additional perspectives. Thank you.
Thanks.
Speaker 81
Good afternoon. Michael Mellantine. I'm a first time public commenter, and it's you've run a great meeting, and I appreciate all that you do. I was rather shocked when you had the direct question of what's going to happen to access with the Prop. 56 cuts for the dental payments, and they couldn't give a clear answer.
I don't even give you a clear answer. It's going to be devastatingly cut dramatically, at least 50, I would think. But I'm an anesthesiologist. Me and my dental partner own a dental center in San Jose. We see children.
I put them to sleep. These are kids with autism, developmental delay, Down syndrome, etcetera. The most vulnerable of the Medi population, I would think. And if these Prop. 56 cuts come through, that's a 43% reduction in Medi Cal revenue.
95% of what we do is Medi Cal. We can't sustain a business that way. Have to go away. We get so many reviews on our website, how wonderful you know, they have access to us. It's going to go away.
Speaker 82
Flores with the California Farm Worker Foundation. The Central Valley is home to some of the highest concentrations of Medi Cal enrolled children in California. Many families we serve are farmworker families and low income households who depend on Medi Cal solely as their only option for dental care. Reducing funding will widen existing health disparities in already underserved communities. We respectfully ask the legislature to restore funding for medical dental services.
Thank you so much for your time.
Speaker 83
Yesenia Robancho with En Child Poverty California. I just want to say thank you to Jesus at SEIU. We urge you to unrig the system and properly tax wealthy corporations who just benefited from $1,000,000,000,000 in tax credits from the federal government, paid for by cuts to Medi Cal. And these corporations still expect California to foot the health care bill for their unpaid workers. That's a shame.
We also urge you to oppose any additional inhumane cuts to Medi Cal. And there is still time to revert the cuts to dental coverage, as folks have said. And we must undo the racist exclusions and freezes from last year. Thank you.
Speaker 84
I know, right? Raymond Contreras with Lighthouse Public Affairs on behalf of Fullwell regarding Cal AIM. Under Cal AIM, community supports have been instrumental in expanding access to care for patients across California. And the continued implementation of community supports in lieu of services is critical for maintaining patient entered care and saving health care dollars. Too many patients across the state are living with preventable chronic diseases and access to nutritious foods to help prevent, treat, and reverse these health conditions.
Since CalAIM's launch, the community supports, known as medically tailored meals, food has connected to over two and twenty thousand patients with food interventions that have helped them achieve dramatic health improvements and avoid a more intensive level of care. Without ongoing prioritization of community supports, we risk wasting the billions of dollars that California has invested in establishing these services across the state over the last four years and patients not seeing the positive health outcomes they deserve. Thank you.
Speaker 1
Thank you so much. All right. Thanks, y'all. Budgets, upcoming number three in Health and Human Services is adjourned.
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