Volume 3, Issue 3 - January 13, 2023
2023-24 State Budget
The Governor announced his 2023-24 proposed state budget this week. His plan avoids touching California’s $28 billion rainy-day reserves by balancing the budget through a combination of funding delays ($7.4 billion), reductions ($5.7 billion), fund shifts ($4.3 billion), trigger reductions ($3.9 billion) and borrowing ($1.2 billion). Areas avoiding budget cuts in the plan include K-12 education, higher education, homelessness, healthcare access, public safety, economic development and wildfire, drought and flood mitigation.
You can view the full summary here, and SYASL staff notes of his Q&A with press here. The Legislative Analyst's Office has also released its overview of the proposed budget, view here. Below is a slide from the Governor's presentation that relates to healthcare, including mental health. Please keep in mind in reviewing this chart that - by and large - the Governor was restating investments made over the last two budget cycles and highlighting the extent to which he proposes to preserve them. Highlights include the following:
The Budget maintains funding to expand full-scope Medi-Cal eligibility to all income-eligible Californians, regardless of immigration status. There are no proposed reductions in this area. Additionally, the Budget sustains approximately $10 billion in total funds to continue the work on CalAIM.
In addition to the recent massive investment in CalAIM, the Budget includes $17.9 million ($6.3 million General Fund) in 2025-26 increasing to $116.6 million ($40.8 million General Fund) at full implementation to allow up to six months of rent or temporary housing to eligible individuals experiencing homelessness or at risk of homelessness and transitioning out of institutional levels of care, a correctional facility, or the foster care system and who are at risk of inpatient hospitalization or emergency department visits.
The Governor has finally acknowledged the need to provide stable and ongoing state general fund support to the counties, going so far as to project spending $108.5 million in 2025-26 and at least as much annually thereafter to support estimated county behavioral health department costs for the CARE Act. In late breaking news (see below), LA County has reached agreement with the Newsom Administration to implement CARE Court earlier one year earlier than anticipated when SB 1338 was signed.
The Governor’s proposed budget maintains the previously planned investments in solutions to reduce the felony Incompetent to Stand Trial (IST) waitlist, which included $535.5 million in 2022-23 and increased to $638 million by 2025-26. The Administration notes that in calendar year 2022, the waitlist declined from a high of 1.953 to 1,473 as a result of implementing these solutions and increased operational efficiencies.
The budget maintains $300 million ongoing General Fund to modernize state and local public health infrastructure and transition to a resilient public health system. Of this amount, $100 million General Fund supports increased state public health capacity in foundational public health areas such as emergency preparedness and response and workforce development while the remaining $200 million General Fund is for local health jurisdictions to expand public health staffing and reduce health disparities.
Health Care Systems
The Budget proposes the renewal of the Managed Care Organization (MCO) Tax effective January 1, 2024, through December 31, 2026, to help maintain Medi-Cal program funding for the Medi-Cal expansion to all income eligible individuals and minimize the need for reductions to the program.
This is one of the few areas where, in light of the State's projected deficit, the Governor proposes new spending. His proposal call for an additional $93 million in Opioid Settlement Funds over four years beginning in 2023-24 to support youth- and fentanyl-focused investments for the Department of Health Care Services and for the Department of Public Health as follows:
HEALTH AND HUMAN SERVICES
- $79 million for the Naloxone Distribution Project to increase distribution to first responders, law enforcement, community-based organizations, and county agencies.
- $10 million for fentanyl program grants to increase local efforts in education, testing, recovery, and support services to implement Chapter 783, Statutes of 2022 (AB 2365).
- $4 million to support innovative approaches to make fentanyl test strips and naloxone more widely available.
- The Administration anticipates receiving additional funds from new settlements with opioid retailers.
RECENT SIGNIFICANT INVESTMENTS AND ACTIONS
DEPARTMENT OF HEALTH CARE SERVICES
- Expanding Health Care Access and Delivery System Transformation—The Budget maintains $844.5 million ($635.3 million General Fund) in 2023-24, $2.1 billion ($1.6 billion General Fund) in 2024-25, and approximately $2.5 billion ($2 billion General Fund) ongoing to expand full-scope Medi-Cal eligibility to all income-eligible adults ages 26 to 49 regardless of immigration status on January 1, 2024.
- Behavioral Health Continuum—The Budget maintains over $8 billion total funds across various Health and Human Services departments to expand the continuum of behavioral health treatment and infrastructure capacity and transform the system for providing behavioral health services to children and youth.
- Healthcare Workforce—The Budget maintains over $1 billion General Fund to the Department of Health Care Access and Information (HCAI) to strengthen and expand the state’s health and human services workforce. These investments include funding for increasing psychiatrists, nurses, community health workers and social workers, and supporting new individuals coming into the workforce in behavioral health, primary care and reproductive health.
More broadly, the Medi-Cal budget includes $137.7 billion ($32.3 billion General Fund) in 2022-23 and $138.9 billion ($38.7 billion General Fund) in 2023-24. Medi-Cal is projected to cover approximately 15.2 million Californians in 2022-23 and14.4 million in 2023-24—more than one-third of the state’s population.
SIGNIFICANT BUDGET ADJUSTMENTS
- California’s Behavioral Health Community-Based Continuum Demonstration—The Budget includes $6.1 billion ($314 million General Fund, $175 million Mental Health Services Fund, $2.1 billion Medi-Cal County Behavioral Health Fund, and $3.5 billion federal funds) over five years for the Department of Health Care Services and the Department of Social Services to implement the Behavioral Health Community-Based Continuum Demonstration, effective January 1, 2024.
- Managed Care Organization Tax—The Budget proposes the renewal of the Managed Care Organization (MCO) Tax effective January 1, 2024, through December 31, 2026, to help maintain Medi-Cal program funding for the Medi-Cal expansion to all income eligible individuals and minimize the need for reductions to the program. This tax renewal maintains the structure from the prior MCO Tax authorized in Assembly Bill 115 (Chapter 348, Statutes of 2019) as approved by the federal government with minor modifications and data updates. The Budget includes $1.3 billion ($317 million in reduced General Fund spending) in 2023-24 and the MCO Tax is estimated to offset $6.5 billion in General Fund spending over the three years. See below for further information on the MCO Tax.
- Designated State Health Program and Rate Increases—The Budget reflects $40.4 million General Fund savings in 2022-23 and $161.6 million General Fund savings in 2023-24 through 2026-27, for total General Fund savings of $646.4 million, from the anticipated federal reauthorization of Designated State Health Program funding to cover the costs of the Providing Access and Transforming Health and CalAIM Justice Initiative. As a condition of approval of Designated State Health Program funding, DHCS is required to demonstrate compliance with minimum reimbursement levels for specific service categories. The Budget includes $22.7 million ($8.6 million General Fund) in 2023-24 and $57.1 million ($21.7 million General Fund) ongoing for primary care and obstetric care provider increases. The Administration will continue to evaluate the need for additional targeted provider rate increases in the May Revision.
- Reproductive Health Services 1115 Waiver—The Budget includes $200 million ($15 million General Fund) in 2024-25 for a grant program through an 1115 federal demonstration waiver focused on supporting access to family planning and related services, system transformation, capacity, and sustainability of California’s safety net.
- Behavioral Health Bridge Housing Program—The Budget delays $250 million General Fund of the total $1.5 billion General Fund to 2024-25 for the Behavioral Health Bridge Housing Program. The Budget maintains $1 billion General Fund in 2022-23 and $250 million General Fund in 2023-24 for this program. This money will go to counties, cities, and local continuums of care to assist in addressing California's homelessness crisis.
- Behavioral Health Continuum Infrastructure Program—The Budget delays the last round of behavioral health continuum capacity funding of $480.7 million General Fund appropriated in the 2022 Budget Act for 2022-23 to $240.4 million in 2024-25 and $240.3 million in 2025-26. A total of $1.2 billion has been awarded to date, and the Budget maintains $480 million General Fund for crisis and behavioral health continuum grant funding to be awarded in 2022-23.
1991 AND 2011 REALIGNMENT
- Emergency Response and SMARTER Plan Implementation—The Budget reflects $176.6 million General Fund in 2023-24 to continue the state’s efforts to protect the public’s health against COVID-19, consistent with the Administration’s SMARTER Plan, and maintain significant information technology systems, including the California COVID Reporting System for laboratory data management and CalCONNECT for case and outbreak investigation.
- Federal Public Health Emergency Extension—The Budget assumes a two-quarter extension of the federal Public Health Emergency through mid-April 2023 and enhanced federal funding through the end of the 2022-23 fiscal year. The Budget continues to reflect significant fiscal impact related to COVID-19 across various Health and Human Services departments. Additionally, the Budget does not reflect the impact of the recently signed federal Consolidated Appropriations Act. The May Revision will reflect the impact of required changes related to Health and Human Services programs such as the timing of Medi-Cal eligibility redeterminations and phasing out of enhanced federal funding at the end of the federal COVID-19 Public Health Emergency.
- Mello-Granlund Older Californians Act Modernization Pilot Program—The Budget includes $37.2 million annually across five years starting in 2022-23 for pilot programs supporting community-based services programs, senior nutrition support, family and caregiver supports, senior volunteer development, and/or aging in place. This reflects $186 million General Fund spent over five years instead of across three years as originally planned in the 2022 Budget Act.
These fund sources are projected to increase by 1.3 percent from 2021-22 to 2022-23 and by 1.6 percent from 2022-23 to 2023-24.
LA County Accelerates CARE Court Implementation
Today, Los Angeles County moved to accelerate its implementation of CARE Court, the state’s new framework to deliver mental health and substance use disorder services to Californians suffering from severe mental health disorders. The County is working to implement the CARE Act by December 1, 2023, one year ahead of schedule. Los Angeles County, the state's most populous, will join the original seven counties committed to implementing CARE Court in 2023: the counties of Glenn, San Diego, San Francisco, Tuolumne, Stanislaus, Orange and Riverside.
“CARE Court brings real progress and accountability at all levels to fix the broken system that is failing too many Californians in crisis,” said Governor Gavin Newsom. “I commend Los Angeles County leaders, the courts and all the local government partners and stakeholders across the state who are taking urgent action to make this lifesaving initiative a reality for thousands of struggling Californians.”
The announcement comes just days after the Los Angeles County Board of Supervisors voted unanimously to declare a local emergency for homelessness, clearing the way for an expedited and regional response to the crisis.
Legislators continue to introduce new bills - the list is growing - you may review it here. CSAP's Government Affairs Committee will hold its first meeting next Thursday to review some of the new bills.
Eggman Named New Senate Health Committee Chair
Senator Susan Eggman, champion for mental health and CSAP ally, has been appointed the new Senate Health Committee Chair for 2023, replacing Senator Pan, who was termed out last year after serving five years as Chair. Senator Pan is a pediatrician who prioritized the State's response to the COVID-19 pandemic and authored legislation related to childhood vaccination laws. We are excited to have Senator Eggman in a committee where many of CSAP's bills will be heard. As committee Chair, Senator Eggman plans to prioritize mental health and homelessness. Read more here.
CMA advocates for increased Medi-Cal access through the state budget
As mentioned above, one of the Governor's just-released proposals is to resume the taxation of managed care organizations (MCO). The MCO tax, which allows the state to receive federal matching funds, had been in place for more than a decade and expired late last year. The California Medical Association (CMA) is urging the Governor to dedicate MCO tax revenues to raise Medi-Cal rates in order to provide access to care to the millions of Californians with Medical-Cal coverage. Read more here.
More State Updates
Equity Working Group
You are invited to join the next CYBHI Equity Working Group Meeting on January 18, 2023, from 3:00 p.m. to 5:30 p.m. PST. You may register here.
Grant Opportunities and Opportunities for Public Comment
We are regularly notified of grant opportunities and opportunities to comment on draft behavioral health regulation. For information on the latest opportunities, see here.
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