Thursday, February 11, 2016 The CSAC Bulletin
Legislature Hears MCO Fix Proposal
The Senate and Assembly Public Health and Developmental Services Committees held informational hearings Wednesday on the Governor’s proposed Managed Care Organization (MCO) fix.

The Governor’s proposal was released on Monday in the form of SBX2 15 (Hernandez) and ABX2 20 (Bonta), and the authors of the two bills, who also happen to chair the respective committees, used the hearings to explore the proposal, allow legislators to ask questions, and receive testimony from the public. No votes were taken in either house, and both committees were held in the Second Extraordinary Session on Health Care.

CSAC supports both SBX2 15 and ABX2 20, which provide a fix for the expiring MCO tax and secure $1.3 billion in funding for critical Medi-Cal services, including the Coordinated Care Initiative (CCI).
On a county-by-county basis, the tax structure proposed in SBX2 15/ABX2 20 will have fiscal consequences for counties that operate local health plans, but the preservation of services currently funded by the MCO tax also benefits counties.

The California Association of Health Plans, which was the lead negotiator on the MCO deal, also testified in support of the measures, which create a three-tier system for health plans based on lines of business, such as commercial and Medi-Cal. They also lock in the tax rates for each plan based on enrollees for three years, thereby ensuring a static state revenue stream, stability and predictability for plans, and the opportunity to revisit data and respond to market changes after three years.

Both hearings also included mentions of work being done to increase the rates paid to disabled services providers. It is possible that there is “room” in the MCO fix proposal to fund up to $200 million in rate increases for these providers, but negotiations are ongoing. It is likely that the developmental rates issue will appear in a separate special session bill.

A special session vote on the MCO fix deal in the committees, and possibly on the legislative floors, could come next week.