LAO Publishes Analysis of Proposition 56 Spending on Medi-Cal

The California Legislative Analyst’s Office (LAO) recently published its analysis of the use of Proposition 56 tobacco tax revenues in Medi-Cal to improve access to quality care. The LAO examines financing and access and quality care monitoring under the Medi-Cal program and summarizes how Proposition 56 funding has been used in the Medi-Cal Program to date.

Medi-Cal began receiving Proposition 56 funding in FY 2017-18. Annually, Medi-Cal receives approximately $1 billion. With tobacco use projected to continue to decline, Proposition 56 revenues for Medi-Cal are also expected to gradually decline on a year-over-year basis. The LAO found that the FY 2018-19 budget generally allocated Proposition 56 funding in Medi-Cal in accordance with the 2017-18 agreement, with the bulk of funding going to provider payment increases. The LAO report goes on to examine Governor Newsom’s FY 2019-20 budget proposal which includes provider payment increases, loan repayment programs, and new supplemental payment programs (such as payments for developmental and trauma screenings and family planning services).

The LAO further assesses the governor’s proposed Proposition 56 expenditures in Medi-Cal and lays out a number recommendation for the Legislature’s consideration. Notably, the LAO recommends rejecting proposed supplemental payments for developmental screenings as managed care plans are already required to arrange such services and are already being compensated for these screenings. The LAO recommends strong consideration of the value-based payment program proposed by the Newsom Administration to improve areas of known deficiency within Medi-Cal. Other recommendations center on Medi-Cal access and quality care monitoring and provider payments. The full LAO report is available here.