The state's fiscal 2018 proposal phases out CCI and shifts more costs for in-home services to counties.
This story originally appeared in California Healthfax.
Gov. Jerry Brown is proposing a $122.5 billion state budget for fiscal 2018 that includes additional funding for Medi-Cal and would cut a program that provides managed care for dual-eligible Medicaid-Medicare beneficiaries.
In his budget address, Brown mentioned the uncertainty surrounding the Affordable Care Act and a potential repeal that could impact the state's Medi-Cal program, which has added more than 3.5 million new members through Medicaid expansion.
The proposed fiscal 2018 budget includes $800 million in additional spending to support growth in Medi-Cal, which now covers 14.3 million state residents, but has no contingency plan for potential cuts in federal funding for Medicaid expansion, which is financed through $15 billion in federal funds.
"We can't budget for something that hasn't happened yet," Brown told reporters at a news conference last week. "That's why we have to hang onto to our hat here. It's going to be a rough ride and we can't tell where we'll be in a few months."
Recent proposals in Congress have suggested major changes to the Medicaid program, but it's not clear what those changes will be and when they will take effect. The administration "stands ready to work within the fiscal constraints facing the state," Brown said.
The $122.5 billion budget represents a slight decrease from last year's $122.7 billion budget and reflects concerns about a potential shortfall in tax revenues for the last six months of 2017 that may total up to $2 billion.
Coordinated Care Phase-out
The budget proposes phasing out elements of the state's Coordinated Care Initiative (CCI)—a program launched in 2014 that provides managed care for dual-eligible patients along with long-term care—and eliminating a related In-Home Supportive Services (IHSS) program that provides funding to counties.
The net result of these changes is a General Fund reduction of $626.2 million in 2017-2018, according to budget estimates. The state is required to determine, on an annual basis, whether CCI is cost-effective.
If CCI is not cost-effective, "it ceases operation in the following year," the budget proposal notes. "The budget estimates CCI will no longer be cost-effective, even with the recent enactment of an allowable managed care tax.
Therefore, pursuant to provisions of current law, the program will be discontinued in 2017-2018."
Some elements of the CCI program will be retained and the budget proposes to "extend the Cal MediConnect program, continue mandatory enrollment of dual-eligible members, and integrate long-term services and supports (except IHSS) into managed care."
Cal MediConnect launched as a three-year pilot program in 2014 to provide managed care for dual-eligible patients and currently has more than 114,000 members.
The proposal to phase out CCI would also end the state's IHSS Maintenance of Effort agreement and shift more costs for in-home services to counties.
The California State Association of Counties (CSAC) said the plan would shift more than $4.4 billion in costs from the state to counties over a six-year period with no additional revenue to cover those expenses.
"This would be devastating to counties all over the state," said CSAC President and Alameda County Supervisor Keith Carson. "We undoubtedly would have to make cuts to other vital social services to cover these costs."
Another proposed budget cut would eliminate $33.4 million in healthcare workforce funding that was allocated to address a primary care physician workforce shortage in California. The $33.4 million represents first-year funding for a three-year, $100 million program.
"Community health centers recognize that it's going to be a challenging year for healthcare in America, but we're alarmed to see the elimination of the state's investment in healthcare workforce funding," said Carmela Castellano-Garcia, president and CEO of California Health+Advocates.
"We are committed to working with the Legislature and the Governor to forge solutions that protect our state's most vulnerable communities."