Senate Budget Subcommittee No. 3 Convenes Day-Long Hearing on DHCS, CDPH, and DSH Issues

The Senate Budget Subcommittee No. 3 on Health and Human Services convened a marathon hearing, beginning sometime in the 10 o’clock hour and carrying on through the evening. Members heard budget items under the Department of State Hospitals (DSH), the Department of Health Care Services (DHCS) and the Department of Public Health (CDPH). Discussion on items of particular interest are highlighted below.

Proposition 55 – Calculation of available revenues for Medi-Cal

The first item heard under DHCS was the calculation of available revenues for Medi-Cal under Proposition 55. The Administration estimates roughly $4.9 billion in revenues to be realized in the second-half of FY 2018-19.  The Department of Finance provided very brief comments on the calculation, however the Legislative Analyst’s Office followed up with a more comprehensive overview. Highlighting key talking points from the LAO analysis on Proposition 55 released earlier in the budget session, the LAO highlighted two contributing reasons that the Administration identifies a deficit in the workload budget, resulting in less revenue available to Medi-Cal: 1) the optional $3.5 billion additional deposit into the Rainy-Day Fund; 2) broad definition of currently authorized services included in the workload budget. According to the LAO, should those two components be treated differently, there could be millions or billions available for Medi-Cal. However, the LAO did remind the Legislature that the measure granted discretion to the Administration to determine the calculation and stated that Legislature could not take action to independently change the calculation.

Senators raised questions around the calculations and expressed concerns with the lack of funding available for Medi-Cal. The item was held open.

Proposition 56

The lengthiest portion of the hearing focused on Proposition 56. Recall, in the 2017-18 Budget Act, the Legislature and Administration dedicated significant resources for the following supplemental payments: $325 million to physician services, $140 million to dental services, $50 million to women’s health services, $27 million to unfreeze reimbursement rates intermediate care facilities for individuals with developmental disabilities, and $4 million to increase reimbursement to providers serving AIDS Waiver beneficiaries. DHCS Director Jennifer Kent noted a delay in implementing supplemental payments due to delays in securing federal approvals and technical programming changes needed for DHCS claiming systems. She noted supplemental payments should now be flowing through managed care plans dating retroactively back to July 2018, however rate increases are still awaiting approval from the federal government.

The hearing featured a provider panel consisting of representatives from UC Health, Planned Parenthood, Western Dental and Orthodontics, the California Medical Association and California Pan-Ethnic Health Network. Each spoke to the need to strengthen provider reimbursement and access for Medi-Cal beneficiaries. A portion of the discussion focus on timely access for both primary care and specialty care. There were also a number of stakeholder proposals for Proposition 56 funding that were heard. All items were held open.


DHCS Director Jennifer Kent shared that dental utilization for children has increased since 2016. She noted the State’s goal to increase the dental utilization rate for children to 47 percent by the end of 2020 and proudly shared that current utilization for children is at 45 percent. Less encouraging was the adult utilization, which currently stands at roughly 20 percent, however Director Kent highlighted a number of efforts underway to increase the low utilization through increasing provider participation and enrollment. She mentioned efforts to simplify the provider enrollment application, making provider enrollment through an online portal available, and outreach to eligible beneficiaries. She also noted ongoing discussions with the department and stakeholders around strategies to increase the number of patients seen, in addition to improving continuity of care and access. The issue was held open.

1115 ‘Medi-Cal 2020’ Waiver

DHCS is soliciting the continuation of positions to support continued compliance and administration of the Medi-Cal 2020 Waiver. Director Kent highlighted a few programs including PRIME, Whole Person Care and Substance Use Disorder Waiver as the first of their kind in the nation. She provided complimentary remarks regarding the extraordinary work being done by counties and partners, particularly in working with the homeless and recently incarcerated populations. During public comment, Disability Rights California provided comments around how amazing the work of Whole Person Care has been and urged the continuation of the program. All items were held open.

California Children’s Services

During the overview on the Family Health Estimate, Director Kent provided the Subcommittee with a brief update on the Whole Child Model transition. She highlighted the beneficiary notices that have been issued and provider network certification work being done. Director Kent spoke confidently regarding the Department’s ability to meet the July implementation date for Phase 1 Whole Child Model counties.