The Legislature has adopted and sent to the Governor the 2017-18 state budget that includes some increases in spending for Medi-Cal physician payments. Last year the voters approved Prop 56 to increase the tax on a pack of cigarettes by $2 and dedicate a large portion of those funds to increasing reimbursement rates for physician and dentists. The new tax revenues should provide about $1 billion in new Medi-Cal funds. Though the initiative clearly stated that these funds could not be used to "supplant" existing Medi-Cal spending the Governor surprised most observers by taking those funds and backfilling other Medi-Cal expenses and providing no increases in Medi-Ca rates. The claim was that the restriction on use only applied to existing Medi-Cal expenses and those dollars could be used for other purposes in this and future budget years.

 

The Legislature pushed back in numerous budget hearings claiming that the Governor was subverting the will of the people. Finally a compromise was reached and incorporated into the final budget version sent to the Governor for signature. The final amounts of $325 M for doctors, $140M for dentists, and $55M for family planning services was much less then what both the Assembly and Senate had recommended.  It is conditioned upon federal approval and does allow for larger amounts in the fiscal year 2018-19 if state finances are solid. It is not yet clear how these supplemental payments will be calculated but the intent is to promote access to Medi-Cal patients and enhanced access by physicians increasing their Medi-Cal caseload. DHCS will issue those guidelines and CMA had proposed some specific recommendations. These will be supplemental payments and not adjustments to actual reimbursement rates. CRS will be involved in those discussions and we will communicate information as it becomes available.