The Governor released his proposed budget for the fiscal year 2017-2018 beginning on July 1, 2017. After several years of budget surpluses the Governor now projects a budget shortfall of approximately $1.8 Billion by the end of the next fiscal year. Not all analysts agree with that projection but it is a starting point for the budget discussions. That deficit comes after the passage of ballot propositions to maintain some of those "temporary" tax increases previously passed by the voters but due to expire in 2018.

 

For DME/ medical supply providers that are not any really significant proposals. The new Medi-Cal money of about $1 Billion provided by the passage of Prop 56 increases in cigarette taxes that most assumed would be used to improve Medi-Cal provider rates is instead used by the Governor to cover other Medi-Cal funding deficiencies. That will be a subject of debate during the budget deliberations.

 

The Medi-Cal clawback for DME and supplies is noted in the budget for DME as a savings. We have heard nothing new from DHCS re implementation other than a promise of 60 day notice to providers and the clawback over a period of time.

 

There is mention of the Coordinated Care Initiative (CCI) and the assessment that it has not been cost effective in the pilot used in seven counties. Under the law if the pilot does not save costs it will not be extended to other counties. The net result is that the state will not fund some IHSS components but it won't eliminate the effort to enroll dual eligibles in Medi-Cal Managed Care. The effort has been hampered by large percentages of patients opting out of participation.

 

There is also a budget proposal to extend out the deadline for the pilot program for CCS and the Whole Child Model. This is preliminary and if there are any delays it will be included in the final budget adopted in June. We will monitor that process and discussion.