CHA News Article

Legislature Approves 2017-18 State Budget

The Legislature approved the $183 billion state budget and accompanying trailer bills June 15. The budget package will now go to the Governor, who is expected to sign it by July 1. Issues addressed in the final budget package include:

  • Proposition 56 Revenue Allocation. One of the last issues to be resolved during the past month of negotiations was the allocation of Proposition 56 funds within the Medi-Cal program. The agreement reached by the Legislature and the administration appropriates $1.3 billion of Proposition 56 tobacco tax revenue to fund $546 million in supplemental payments to certain providers, including $325 million for physicians and $140 million for dentists; the remaining money will go to other programs. These supplemental provider payments could increase to $800 million in the 2018-19 budget year, depending on the state’s fiscal condition and other factors. Originally, the administration proposed allocating $1.3 billion of Proposition 56 revenue for expenditure growth in existing Medi-Cal programs since last year’s budget. Both the Senate and Assembly rejected the Governor’s proposal, instead proposing to allocate the money to provider rate increases and other Medi-Cal programs. 
  • Graduate Medical Education (GME) Funding. The budget conference committee closed this issue last week, voting to support the administration’s January budget proposal. The final budget allocates $50 million in Proposition 56 revenue to the University of California (UC) system for GME, but decreases General Fund monies allocated to the UC system by $50 million — thereby saving the General Fund $50 million. CHA advocated for the Assembly’s proposal, which would have restored $50 million from the General Fund to the UC system, and was very disappointed to see no change in this proposal.
  • Song-Brown Program GME Funding. The budget conference committee accepted the Assembly’s proposal, which restores the annual allocation of $33.3 million of General Fund revenue for the next three years, for a total of $100 million. The administration’s budget proposed to eliminate the 2016 budget’s allocation of $33.3 million in General Fund monies for three years for primary care residency slots and student loan repayments within the Song-Brown Program. CHA advocated in support of the Assembly’s version.
  • 340B Drug Discount Program. Both the Assembly and Senate budget subcommittees on health rejected the Department of Health Care Services trailer bill language, which would have restricted 340B entities from contracting with pharmacies to dispense drugs purchased under a program discount. This trailer bill language, opposed by CHA, is not in the final budget.
  • Restoration of Dental and Optical Benefits. The final budget package allocates $34.5 million from the General Fund to restore remaining uncovered optional Medi-Cal dental benefits beginning Jan. 1, 2018, as well as $12.5 million to restore the optician/optical lab optional Medi-Cal benefits beginning Jan. 1, 2020.
  • Palliative Care Program. The administration’s January budget proposed delaying the implementation of the Palliative Care Program established by SB 1004 (Chapter 574, Statutes of 2014), until next year at the earliest. However, due to opposition to that proposal, the final budget provides funding for the program to begin Jan. 1, 2018.
  • Coordinated Care Initiative. The final budget continues funding for key components of the Coordinated Care Initiative, including the duals demonstration project, mandatory managed care for duals, and inclusion of long-term services and supports in managed care benefits. 
  • Staffing Ratios in Skilled-Nursing Facilities. The budget includes trailer bill language that would increase the nursing hour per patient day minimum from 3.2 hours to 3.5 hours, beginning July 2018. The proposal also requires that 2.4 hours of the minimum be covered by certified nursing assistants. This proposed language does not apply to hospital-based skilled-nursing facilities.