California State Legislature Passes Major Health Care Reform Bills

Monday, February 29, 2016

New MCO tax to secure federal funding for Medi-Cal

DDS providers to receive much needed increase in funds  

Sacramento, CA – Today, the California State Legislature passed a package of major health care reform bills including SBX2-2, a Managed Care Organization (MCO) Tax, that will secure federal funding for Medi-Cal, and ABX2-1 that will increase funding for developmental disability services by $306.5 million.

“This is a big deal” said Assembly Majority Floor Leader Chris Holden. “Thanks to Governor Jerry Brown, a bi-partisan effort, and the hard work of all stakeholders, we aligned our Medi-Cal and MCO tax structure with federal guidelines while increasing health related funding to where it is needed most.”

The current MCO financing mechanism is set to expire in June. Without a new mechanism in place that meets federal guidelines that were set in 2013, the State would forego critical federal funds. Last June, Governor Brown called for a Special Session in order to reach an agreement with the Legislature.

The new MCO Tax structure under SBX2-2 meets the federal guidelines by applying a tiered uniform tax rate on all health plans. The reform is supported by a broad coalition of health insurance companies, health care providers, and health care advocacy groups.

ABX2-1 will provide much needed funding for the community-based developmental services system, including a 7.5% increase for direct care staff and a 5% increase for supported and independent living. The bill also provides new funding, $11 million each year for 3 years, to address disparities in allocation of services such as parent or caregiver cultural competency training, and outreach to underserved population.

“Since the recession, I’ve seen developmental disability services suffer, including non-profit organizations and individuals providing these services in my district,” said Holden. “Thankfully, with increased funding from this bill, those providing these services have the resources to help a group often neglected.”