Department of Health Care Services
Medi-Cal


CURRENT YEAR
 The May Revision reflects total Medi-Cal expenditures of $36.6 billion ($14.1 billion General Fund), a decrease of $353.2 million (an increase of $12.7 million General Fund) from the Governor's Budget. General Fund expenditures for Medi-Cal have increased by $427.7 million, or 3.1 percent over the 2006-07 level.

The average monthly Medi-Cal caseload is expected to decrease by 1,200 beneficiaries to 6,636,500 eligibles, which is a decrease of 0.02 percent from the level projected in the Governor's Budget. This revised caseload is 0.6 percent higher than the 2006-07 caseload.

The net General Fund decrease from the Governor's Budget level includes the following significant adjustments:

  • $16.0 million will be transferred from Medi-Cal to the Genetically Handicapped Persons Program (GHPP) and $3.4 million to the California Children's Services (CCS) Program to cover current-year cost increases. Treatment costs, especially those for hemophilia, have greatly increased in the GHPP, and CCS continues to experience growth in its treatment and therapy costs (see issue below in the Family Health section for greater detail).
  • $102.7 million decrease due to changes in the timing of the receipt of federal financial participation (FFP) for interim payments to Designated Public Hospitals (DPHs). These payments are initially paid with 50 percent General Fund and 50 percent federal funds. On a quarterly basis, these payments are adjusted to 100 percent federal funding. The Department of Health Care Services (DHCS) will implement system changes in the current year that will allow the adjustment to occur on a weekly basis instead of quarterly.
  • $47.6 million increase to reflect a loss of savings from various proposed current year Budget Balancing Reductions (BBRs) that have not been adopted. These include the elimination of certain optional Medi-Cal benefits, stopping the payment of Medicare Part B premiums for beneficiaries who do not meet their share of cost, and a delay in the implementation of the 10-percent provider rate reduction to July 1, 2008.

BUDGET YEAR
 The May Revision includes total Medi-Cal expenditures of $37.2 billion ($13.9 billion General Fund), a net total funds increase of $1,172.5 million ($315.7 million General Fund) from the Governor's Budget. General Fund expenditures are expected to decrease by $169.1 million, or 1.2 percent, over the revised 2007-08 level.

The average monthly Medi-Cal caseload is expected to increase from the Governor's Budget by 22,900 beneficiaries, or 0.3 percent, to 6,586,700 eligibles.

The net General Fund increase from the Governor's Budget level includes the following significant adjustments:

  • $13.0 million decrease due to the delayed implementation of Chapter 328, Statutes of 2006 which authorized simultaneous pre-enrollment and application process for uninsured women in the Women, Infants, and Children program into Medi-Cal, allowed presumptive eligibility, and a two-county pilot that would allow Medi-Cal beneficiaries to self-certify their income.
  • $42.0 million decrease by implementing a monthly eligibility requirement for emergency services for undocumented immigrants.
  • $86.7 million decrease by limiting benefits for newly qualified immigrants and immigrants who permanently reside under the color of law (PRUCOL) to the same level as currently provided for undocumented immigrants. Benefits retained include emergency services, pregnancy-related services, long-term care in a nursing facility, and breast and cervical cancer treatment.
  • $31.2 million decrease from the rollback of the allowable income level for persons applying for Section 1931(b), which provides Medi-Cal eligibility to families with low-incomes who meet eligibility requirements. The qualifying level would be lowered to 61 percent of the federal poverty level (FPL) and employment would be defined as the principal wage earner working less than 100 hours a month. Parents with higher incomes who meet the resource and status requirements would be eligible for the medically needy program under Medi-Cal. Savings from this proposal will be phased in and will increase to $342.5 million in 2011-12.
  • $173.1 million increase due to an erosion of savings from various proposed budget balancing reductions. Adjustments to the savings amount also reflect updated caseload estimates and expenditure data, technical corrections, and a delay in enactment until July 1, 2008.
  • $22.4 million increase to reflect the revised estimate of the August 2008 cost-of-living adjustment to 4.9 percent for Skilled Nursing Facilities (SNFs). More recent data reflect higher-than-anticipated growth in labor costs.
  • $169.8 million increase to fund rate adjustments for Medi-Cal managed health care plans. The amounts of the rate adjustments were derived by utilizing an experience-based, plan-specific methodology that was implemented in 2007-08 and is the minimum amount needed to ensure matching federal funds for the Medi-Cal managed care program.
  • $800,000 increase to fund Screening and Brief Intervention, which will allow medical providers to screen Medi-Cal patients in an emergency department setting for non-dependent substance abuse, provide a brief intervention and, as necessary, refer patients for appropriate services. It is estimated that this change will result in General Fund cost avoidance of $1.2 million in 2009-10, increasing to $2.5 million annually thereafter by reducing the number of beneficiaries who progress to the utilization of more expensive drug and alcohol addiction programs. Evaluations of other states, including Washington State, have shown screening and brief intervention to be cost effective.
  • $1.5 million increase to establish the Beneficiary Utilization Review (BUR) Unit. The purpose of the BUR will be to review overuse and abuse of prescription drugs by Medi-Cal beneficiaries. These identified beneficiaries will be assigned to a single primary care physician to ensure that they only get the medical care and services they need. If DHCS determines providers or beneficiaries have been acting in a fraudulent manner, those cases will be referred to the Attorney General or District Attorney offices, respectively. It is anticipated that these efforts will result in substantial savings in unnecessary prescription drug costs.
  • $11.3 million decrease by reducing non-contracted hospital rates. Rates paid to general acute care hospitals for inpatient services will be reduced to the lower of the average regional rate or tertiary rate established by the California Medical Assistance Commission (CMAC) minus five percent or to the non-contracted hospital's interim rate minus 10 percent as enacted by Chapter 3, Statutes of 2008. Hospitals participating in the Selective Provider Contracting Program will be exempt and rural hospitals will remain at their interim rate minus 10 percent consistent with Chapter 3, Statutes of 2008. Similar trailer bill language is proposed for Medi-Cal managed care to reduce the rate of growth in Medi-Cal managed care rates in 2009-10 and thereafter. This proposal is intended to remove the disincentive that exists for contracting with Medi-Cal and to provide cost avoidance related to hospital rates.
  • A net increase of $324,000 for Medi-Cal's fiscal intermediary to hire additional pharmacy consultants to process treatment authorization requests (TARs). These positions will address the backlog in TARs and reduce the need for auto-adjudication, which will result in General Fund savings of $272,000 in 2008-09, increasing to an annual savings of $2.3 million.
  • $102.7 million increase attributable to the new interim rate payment process for Designated Public Hospitals (See issue in Current Year section for more detail).
Other Items of Interest:

  • Fee for Service Improvements in Medi-Cal -- Slowing the rate of growth in health care expenditures is an essential component of efforts to restore the state's fiscal balance and to achieve the coverage for all Californians. The Medi-Cal program is the largest purchaser of health care in California. Medi-Cal spending is concentrated among a small segment of enrollees, the majority of whom have complex chronic medical conditions, coupled with additional conditions, including behavioral health conditions. Five percent of Medi-Cal enrollees incur sixty percent of all fee-for-service (FFS) Medi-Cal expenditures. Two percent of the most expensive enrollees incur more than forty percent of all FFS Medi-Cal benefit expenditures. These statistics underscore the need to look carefully at the health care needs of persons with serious health conditions to assure that the right care is delivered at the right time in the right setting to maximize health outcomes and contain overall costs. Nationally, state Medicaid programs are using a variety of approaches to improve care delivery in their FFS programs. Emphasizing prevention and increased use of primary care services offers the promise of better health outcomes and slower rates of growth in costs. The Administration is committed to working with the Legislature and stakeholders to identify enhancements to the Medi-Cal FFS system that improve health outcomes and slow the overall rate of cost growth.
  • DHCS will enter into a competitive bid procurement process to contract with an organization on a pay-for-performance basis in an effort to reduce durable medical equipment (DME) costs. The vendor will be paid only if cost savings are achieved. The maximum payment would be $1 million, paid on a dollar-for-dollar basis from actual savings. Savings achieved beyond the $1 million threshold will go to the state.
  • Budget trailer bill language is proposed to implement the Public Assistance Reporting Information System (PARIS) pilot project. The purpose of the project is to improve the identification of the subset of Medi-Cal beneficiaries who are also veterans and who may be eligible for duplicative services. The DHCS will implement this project with existing resources beginning in 2008-09.
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CHAPTER HIGHLIGHTS for Health and Human Services Back to Top

 Department of Health Care Services
 image of black pointing arrowMedi-Cal
  Family Health Estimates
 Department of Public Health
 Managed Risk Medical Insurance Board
 Department of Developmental Services
 Department of Mental Health
 Department of Social Services
 Loans and Transfers from Special Funds
PRINTABLE BUDGET DOCUMENTS Back to Top
Revised Budget Summary - Health and Human Services (pdf * - 208K) -
Provides the entire Health and Human Services Chapter in pdf format.
ADDITIONAL INFORMATION Back to Top
Revised Budget Detail - Health and Human Services
Displays Revised Budget Detail information for Health and Human Services.

Proposed Budget Summary - Health and Human Services (January 2008)
Displays Proposed Budget Summary information for Health and Human Services.