Welcome to the "State Issues" section of Children's Hospital's CAN website. Please find below a summary of the major public policy issues at the state level impacting Children's Hospital.
State Budget
On January 8, Governor Schwarzenegger released his proposed 2010-2011 state budget, the back drop of which is a projected $19.9 billion deficit through June 30, 2011. To address the shortfall, the Governor's proposal relies on $8.5 billion in spending reductions, $4.5 billion in funding shifts or new revenue, and $6.9 billion in additional federal revenue. Some of the key budget items impacting health and humans services programs are listed below.
Managed Care Expansion: The budget proposal calls for an increase of $54.9 million for Medi-Cal managed care expansion in the following five counties…Kings, Madera, Ventura, Mendocino and Lake counties. No further details are available at this point regarding for what specific purposes the monies are to be spent and how the monies will be allocated across the five counties.
Hospital Provider Fee: The budget proposal assumes federal approval of the hospital provider fee back to April 1, 2009. To date, CMS has not taken any action on the provider fee. The budget assumes federal approval of the fee by May 2010 with payments beginning June 15, 2010. The budget proposal also assumes receipt of the $320 million for children’s health insurance coverage that is included in the provider fee, which will probably be used to back-fill cuts to Medi-Cal or Healthy Families.
Proposition 10 Funding: Redirect $550 million in Proposition 10 (First Five) funds from the Children and Families Commission budget to high-priority areas serving children. The redirected funds will be used to support children enrolled in programs administered by the Department of Social Services and the Department of Developmental Services. Implementation of this proposal will require voter approval. Recall that voters overwhelmingly rejected a similar proposal in May 2009.
Reduce Healthy Families Program Eligibility: A decrease of $10.5 million in 2009-10 and $63.9 million in 2010-11 by reducing program eligibility from 250 percent to 200 percent of the federal poverty level effective May 1, 2010. A conforming $3.9 million decrease also results in the CCS program for beneficiaries who were previously eligible under the Healthy Families program.
The proposal does include a one-time increase of $55.6 million in funding provided by the First 5 commission to help fund the costs of children up to five years old enrolled in the Healthy Families Program.
Reduce Healthy Families Program Benefits and Increase Premiums: $21.7 million savings by eliminating vision coverage.
Improving Health Care Coordination and Controlling Medi-Cal Costs: Current law includes reform that provides the Department of Health Care Services in partnership with the federal government and stakeholders, broad authority under a demonstration project or waiver to utilize managed care or other specialized delivery systems of care for vulnerable populations, including seniors, people with disabilities, children with significant medical needs, and individuals with behavioral health problems. By providing earlier and appropriate care, this program restructuring will keep Californians healthier and avoid unnecessary emergency room visits. Annual savings of $800 million ($400 million General Fund) are estimated to be achieved through this effort by 2012-13.
Other Medi-Cal Cost Containment: A decrease of $750 million as a result of the number of program cost containment strategies. While California operates one of the least costly Medicaid programs in the nation, costs continue to increase primarily as a result of increases in caseload and costs of services. These strategies are proposed to include a combination of the following: 1) limits on services and utilization controls, 2) increased cost-sharing through co-payment requirements, premiums, or both, and 3) other yet to be announced cost control measures.
Regional Centers: Reductions of $61.6 million for additional savings associated with the annualization of $334 million in current year reforms developed by a stakeholder process. And, $60.9 million in savings by extending a 3 percent payment reduction for regional center operations and services – along with other reforms associated with the Medicaid Waiver.
Federal flexibility & New Federal Funds: As discussed in last year’s state budget, the state is budgeting $1 billion in federal reimbursement. The $1 billion is for health costs of disabled Californians (eligible for Medicare) and a recalculation of what California pays for Medicare Part D drug coverage. Our concern has always been that this $1 billion really doesn’t exist and that California will never see the money, creating a potentially deeper hole in the Medi-Cal program.
The budget also proposes to increase California’s base federal medical assistance percentage (FMAP) from 50 percent to the national average of 57 percent. This would result in a savings of $1.8 billion. In addition to the increased base amount, the budget also proposes to continue the ARRA FMAP increase of 11.59% through June 30, 2011 (currently set to expire December 31, 2010), resulting in a total FMAP of 68.59%.
Trigger Reductions: If the federal funding mentioned above does not materialize, the budget includes certain triggers including the complete elimination of the Healthy Families Program and reductions in Medi-Cal eligibility, including for children.
The Senate and Assembly budget committees have begun to meet, while the Governor has called a special session on the budget to immediately address $8.9 billion of the shortfall. This budget envisions that the Legislature would adopt both a special session package that would be enacted by March 1, 2010, and an annual budget package that would be enacted by June 30, 2010.
Children’s Hospital will be fully engaged throughout the entire process, working hard to protect the interest of our hospital and of the patients and families that we serve.
Hospital Provider Fee
In Fall 2009, Governor Schwarzenegger signed legislation enacting the hospital provider fee. Under the plan, hospitals would be assessed a fee that would be used to secure matching federal funds to make supplemental Medi-Cal payments to hospitals and to provide the state with $320 million in annual funding for children's health care coverage. The fee, which must be approved by the federal Center for Medicare and Medicaid Services before implementation, terminates December 31, 2010.
On January 14, 2010, state Assembly Member Dave Jones introduced Assembly Bill 1653, which could be used to extend the hospital provider fee beyond December 31, 2010.
Legislation - 2009 Wrap Up
Prior to the October 11 midnight deadline for signing or vetoing legislation, Governor Schwarzenegger signed into law AB 1383 and AB 896, two key bills supported by Children’s Hospital Central California.
AB 1383 imposes a fee on hospitals to be matched with Federal funding (subject to Federal approval) that will increase hospital Medi-Cal payments through December 31, 2010. The state has already begun conversations with the federal Health and Human Services Agency (HHSA) regarding the provider fee and, given HHSA’s approval, could begin assessing the fee and issuing increased hospital payments by the third quarter of 2010.
AB 896 extends existing provisions protecting California Children’s Services reimbursement for inpatient services. Without the legislation, the current protections would have sunset December 31, 2009.
The Governor also took final action on the following bills of interest to Children's Hospital.
Governor's signature of AB 1142, which imposes a number of requirements on hospitals upon receiving proof of a patient's Medi-Cal eligibility, including providing that information to other providers rendering services to the patient. More information is forthcoming on this bill's requirements.
Governor's veto of AB 911, which would have required hospitals with EDs to use a specific ED crowding score methodology and to develop a corresponding hospital full-capacity plan.
Governor's signature of AB 896, which extends existing provisions protecting California Children’s Services reimbursement for inpatient services. Without the legislation, the current protections would have sunset December 31, 2009.
Governor's veto of AB 574, which would have prohibited smoking in general acute care hospitals.
Governor's veto of AB 513, which would have required health plans to cover the costs of lactation consultations and rental of breast pumps for breast feeding mothers.