Friday, January 29, 2016 The CSAC Bulletin
Governor's MCO Fix is Moving
Governor Jerry Brown has released a proposal for his MCO fix and hopes to have it heard in the Special Session on Health Care next week.

The Managed Care Organization (MCO) tax is of critical importance for county funding and other Medi-Cal services, and the Governor’s proposal will spare health plans any net costs or losses while realizing $1.3 billion for critical Medi-Cal services.

MCO funding is vital to all counties. It provides implementation funding for the Coordinated Care Initiative (CCI), as well as other critical state-level Medi-Cal services. Furthermore, continuation of the CCI is tied to the county In-Home Supportive Services (IHSS) Maintenance of Effort (MOE) and the eventual plan to transition collective bargaining for IHSS workers from each county to the state. If the current MCO funding for the CCI is not continued, it could jeopardize the IHSS MOE and eventual transfer of collective bargaining. The loss of MCO funding for other Medi-Cal programs would also result in statewide cuts that could affect counties.

Because of this, CSAC is urging counties to contact their local legislative delegations to explain the specific potential local impacts and importance of passing an MCO fix as soon as possible.

Time is running out for California to develop a new MCO funding plan that passes muster with the federal government during the ongoing special session. The current MCO tax expires June 30, 2016, and the Brown Administration is seeking a two-thirds vote of the Legislature on a fix to this problem as soon as possible.

Achieving the two-thirds vote necessary in the Legislature to provide the fix has remained elusive, however. Because it is called a tax, the MCO fix has encountered opposition from Republican legislators.

The Governor’s proposal requires all health plans to contribute funds that would be used by the state to draw down federal funding of at least an estimated $1.3 billion. In return, health plans would receive discounts on their Gross Premium Taxes and Corporate Taxes, as well as receive supplemental payments from the federal funds drawn down by the state, creating a net neutral balance for their participation. While the Governor’s proposal is called the MCO “tax,” it ensures that participating plans do not experience any net costs or losses.

Specific details of the proposal also continue to be refined and negotiated. CSAC is in close communication with local and county-run health plans to ensure minimal impact on these providers, especially in regards to their commercial lines of business, such as IHSS providers. The Governor is hoping to begin work on the special session next week.


See CSAC’s Call to Action here.

For more information and other documents related to the MCO fix, the CCI, and the IHSS MOE, please visit CSAC’s online resources page for the Special Session on Health Care.