 |
Program Enhancements and Other Adjustments
Department of Health Care Services
The Department of Health Care Services (DHCS) will work to ensure that eligible persons and families receive comprehensive health services through public and private resources. By ensuring the appropriate and effective expenditure of public resources to serve those with the greatest health care needs, DHCS promotes an environment that enhances health and well-being.
MEDI-CAL
Medi-Cal, California's Medicaid program, is a health care entitlement program for low-income individuals and families who receive public assistance or lack health care coverage. Medi-Cal serves an estimated 6.6 million people each year, or more than one in six Californians (see Figure HHS-03).
Federal law requires Medi-Cal to provide basic services, such as doctor visits, laboratory tests, x-rays, hospital inpatient and outpatient care, hospice, skilled nursing care and early periodic screening, diagnosis and treatment services, for children until age 21, and federal matching funds are available for numerous optional services. California offers virtually all optional benefits and provides more optional services than any other large state to categorically eligible and medically needy individuals. These services include outpatient drugs, adult dental services, optometry and occupational therapy. As a result, Medi-Cal provides more comprehensive benefits than most employer-funded comprehensive health care programs. A wide range of public and private providers and facilities deliver these services. Providers are reimbursed by the traditional fee-for-service method or by payments from managed care plans.
2006-07 Expenditures
Medi-Cal expenditures are estimated to be $35.5 billion ($13.6 billion General Fund), a General Fund increase of 6.3 percent above the budgeted 2005-06 level. This increase is due primarily to increased caseloads and costs for services. General Fund expenditures for 2006-07 are estimated to be $128 million less than the Budget Act of 2006, due mainly to lower than anticipated costs for Medicare Part A and B premium and Part D "clawback" payments, changes in the timing of hospital payments and higher than anticipated savings in the Adult Day Health Care program as a result of the moratorium on new facilities and success in identifying facilities that are providing inadequate care or billing improperly. Figure HHS-04 displays year-to-year comparisons of Medi-Cal costs and caseload.
2007-08 Expenditures
The Governor's Budget includes $37.4 billion ($14.6 billion General Fund), an increase of $1.9 billion ($979.8 million General Fund) above the revised 2006-07 budget and a net increase of $2.3 billion (an increase of $852 million General Fund) from the Budget Act of 2006. The General Fund increase primarily reflects increases in caseload and cost per eligible person. Figure HHS-05 displays annual General Fund costs per average monthly eligible beneficiary.
Other departments have programs that are eligible for federal Medicaid reimbursement, such as the DDS. Federal funding for these programs is included in Medi-Cal expenditure totals, but state and local matching funds of more than $5.1 billion appear in the budgets for other state agencies or local governments.
Caseload
Average monthly caseload is forecast to be 6.7 million persons in 2007-08, an increase of approximately 107,400 people, or 1.6 percent, compared to 2006-07. This overall increase compares to an expected 2.5-percent increase in the state's population for the same period.
The number of people enrolled in Medi-Cal through their public assistance cash grant eligibility has been declining since 1995. These enrolled individuals will represent 38 percent of all Medi-Cal enrollees in 2007-08. Overall caseload is increasing, and the portion comprised of seniors and persons with disabilities is expected to increase by 2.9 percent, to approximately 1.7 million beneficiaries in 2007-08. Figure HHS-06 reflects Medi-Cal caseload by eligibility category.
Figure HHS-07 shows federal data from 2005-06 (the most recent information available) for the ten most populous states. By percentage of state population, California served about 17.7 percent of state residents, exceeded only by New York. California has one of the lowest average cost-per-recipient rates in the nation: $5,626 per beneficiary, versus a national average of $7,220 per beneficiary.
California has achieved this relatively low-average cost primarily through negotiated hospital and drug rebate contracts, a high level of utilization review, extensive prepayment controls, extensive anti-fraud efforts and conservative provider rate reimbursements. Further, some program expansion populations, such as working parents and children, have resulted in a lower cost per eligible person.
Pharmaceuticals
During the last few years, the cost of drugs has increased dramatically, and pharmaceutical costs have become a significant component of all health care costs. Technological advances in the development of new drugs, increased advertising of new and more expensive drugs and expedited federal approval of new drugs have contributed to rising costs. To control costs, the Medi-Cal program utilizes contracts for drugs and has a state rebate program that is projected to secure approximately $579.4 million in drug savings in 2006-07 and $615.2 million in drug savings in 2007-08. Net drug costs in the program are projected to be $881 million General Fund in 2006-07 and $1.0 billion General Fund in 2007-08.
To help contain the increase in prescription drug costs and align the program with federal requirements, the Governor's Budget proposes switching the basis used to establish the drug reimbursement component of pharmacy claims in the Medi-Cal program from the Average Wholesale Price (AWP) to the Average Manufacturer Price (AMP). The AMP provides a lower cost basis through its relation to the actual costs of production, thus minimizing potential cost shifting to Medi-Cal from other drug purchasers and limiting the potential for price fixing. Use of the AMP is consistent with federal requirements and will result in General Fund savings of $44 million.
Managed Care
The Medi-Cal Managed Care Program is a comprehensive, coordinated approach to health care delivery designed to improve access to preventive primary care, improve health outcomes and control the cost of medical care. Approximately 3.3 million Medi-Cal beneficiaries (half of the people receiving Medi-Cal benefits and services) are currently enrolled in managed care plans. Managed care enrollment is projected to remain at 3.3 million enrollees through 2007-08. Funding for managed care plans will be $6.2 billion ($3.2 billion General Fund) in 2007-08.
Managed care includes three major health care delivery systems: the Two-Plan Model, Geographic Managed Care (GMC) and County Organized Health Systems (COHS).
Approximately 2.4 million Californians, or 73 percent of Medi-Cal managed care beneficiaries, are enrolled in the Two-Plan Model, which offers the choice between a commercial plan selected through a competitive bidding process or the county-sponsored local initiative. The local initiative plan consists mainly of providers who have traditionally served the Medi-Cal population. This model ensures continued participation by "traditional" providers and maximizes the type of providers caring for beneficiaries.
The GMC model allows the state to contract with multiple managed care plans in a single county. The first GMC system was implemented in Sacramento in 1994. A second GMC system began operation in San Diego County in 1998-99. Approximately 340,000 beneficiaries are expected to be enrolled in GMC plans in 2007-08.
The COHS model administers a prepaid, comprehensive case-managed health care delivery system. This system provides utilization controls, claims administration and health care services to all Medi-Cal beneficiaries residing in the county. There are five COHS currently in operation serving eight counties. Approximately 572,000 beneficiaries are expected to be enrolled in COHS in 2007-08.
As initiated in the Budget Act of 2005, the state is scheduled to transition the first 4 of 13 additional fee-for-service counties to managed care in 2008.
PROGRAM ENHANCEMENTS AND OTHER BUDGET ADJUSTMENTS
Human Papillomavirus Vaccinations (HPV) -The Governor's Budget includes $11.3 million ($5.6 million General Fund) in 2007-08 to provide HPV to approximately 52,000 Medi-Cal-eligible women ages 19 through 26. The United States Food and Drug Administration recently approved this new vaccine, which has been shown to reduce the risk of getting cervical cancer by up to 70 percent.
Rates for Long-Term Care Facilities -The Governor's Budget reflects savings of $14.4 million General Fund by limiting the maximum rate increase for freestanding skilled nursing facilities to 4.5 percent, rather than the maximum 5.5 percent authorized by Chapter 875, Statutes of 2004 (AB 1629).
Nursing Facility A/B Waiver Cap Increase -The Nursing Facility A/B waiver is a federal home- and community-based services waiver that provides services and support to Medi-Cal beneficiaries to allow them to remain safely in their homes and avoid institutional placements. These services are a critical component of the state's efforts to implement the Olmstead court decision. The Governor's Budget provides $9.3 million ($4.6 million General Fund) to reflect cost increases that have occurred since the existing waiver was implemented, raising the Nursing Facility A waiver cap from $24,551 to $29,548, and the Nursing Facility B waiver cap from $35,948 to $48,180, effective July 1, 2007.
Adult Day Health Care Reform -The Governor's Budget includes $4 million ($1.9 million General Fund) and 47 positions to phase in program reforms and develop a new rate methodology to increase California's ability to retain federal funding and help ensure services remain available for qualified beneficiaries, as required by Chapter 691, Statutes of 2006 (SB 1755).
Provider Enrollment Automation Project -The Governor's Budget includes $0.2 million ($0.1 million General Fund) to initiate development of a provider enrollment case and document tracking system. This system will streamline the provider enrollment process, thereby shortening the time it takes to enroll providers in Medi-Cal.
Implementation of Federal Deficit Reduction Act Citizenship Requirements -The Governor's Budget includes $0.6 million ($0.3 million General Fund) and 4.7 positions to focus on implementing new federal requirements. Due to pending federal guidance, the Governor's Budget does not include costs for county level activities nor for any Medi-Cal caseload changes.
CHILDREN'S MEDICAL SERVICES
Children's Medical Services has implemented a statewide comprehensive Newborn Hearing Screening Program that helps identify hearing loss in infants and guides families to the appropriate services needed to develop communication skills. The Governor's Budget includes $1.5 million General Fund to expand the Newborn Hearing Screening Program to all California hospitals with licensed perinatal services, as required by Chapter 335, Statutes of 2006 (AB 2651).
CHAPTER HIGHLIGHTS for
Health and Human Services Back to Top
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Health and Human Services (pdf * - 261K)
-
Provides this entire Health and Human Services Chapter in pdf format.
ADDITIONAL INFORMATION Back to Top
Proposed Budget Detail - Health and Human Services
Displays Proposed Budget Detail information for Health and Human Services.
|
pdf* This file requires the latest Adobe Acrobat reader plugin. If you do not have it - click here to download.
