AB 136: Medi-Cal: managed care organization provider tax.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-03-15
Current Status:
Failed
(2024-04-15: Re-referred to Com. on B. & F.R.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill raises the Medi‑Cal per‑enrollee provider tax for Tier II plans (those with 1,250,001 to 4,000,000 Medi‑Cal enrollees) to $205 for each of the 2024, 2025, and 2026 calendar years. This increases the amount that Medi‑Cal participating health plans pay into the state’s managed‑care funding pool.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Under existing law, one of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed care plans.
Existing law imposes a managed care organization (MCO) provider tax, administered and assessed by the department, on licensed health care service plans and managed care plans contracted with the department. Under existing law, all revenues, less refunds, derived from the taxes are deposited into the Managed Care Enrollment Fund, to be available to the department, upon appropriation, for the purpose of funding specified subcomponents to support the Medi-Cal program.
Existing law sets forth certain taxing tiers and tax amounts for purposes of the tax periods of April 1, 2023, to December 31, 2023, inclusive, and the 2024, 2025, and 2026 calendar years. Under existing law, the Medi-Cal per enrollee tax amount for Medi-Cal taxing tier II, as defined, is $182.50 for the 2024 calendar year, $187.50 for the 2025 calendar year, and $192.50 for the 2026 calendar year.
This bill would raise that tax amount for that tier to $205 for all 3 of those calendar years.
This bill would declare that it is to take effect immediately as an urgency statute.
This bill would express the intent of the Legislature to enact statutory changes, relating to the Budget Act of 2023.This bill would express the intent of the Legislature to enact statutory changes changes, relating to the Budget Act of 2023.
This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
(a)For each tax period, the Medi-Cal taxing tiers shall be as follows:
(1)Medi-Cal taxing tier I shall consist of all countable Medi-Cal enrollees in a health plan from zero to 1,250,000, inclusive.
(2)Medi-Cal taxing tier II shall consist of all countable Medi-Cal enrollees in a health plan from 1,250,001 to 4,000,000, inclusive.
(3)Medi-Cal taxing tier III shall consist of all countable Medi-Cal enrollees in a health plan greater than 4,000,000.
(b)For each tax period, the other taxing tiers shall be as follows:
(1)Other taxing tier I shall consist of all countable other enrollees in a health plan from zero to 1,250,000, inclusive.
(2)Other taxing tier II shall consist of all countable other enrollees in a health plan from 1,250,001 to 4,000,000, inclusive.
(3)Other taxing tier III shall consist of all countable other enrollees in a health plan greater than 4,000,000.
(c)For the period of April 1, 2023, through December 31, 2023, and for the 2024 calendar year, the Medi-Cal per enrollee tax amount for each Medi-Cal taxing tier shall be as follows:
(1)The Medi-Cal per enrollee tax for Medi-Cal taxing tier I shall be zero dollars ($0).
(2)The Medi-Cal per enrollee tax for Medi-Cal taxing tier II shall be one hundred eighty-two dollars and fifty cents ($182.50).
(3)The Medi-Cal per enrollee tax for Medi-Cal taxing tier III shall be zero dollars ($0).
(d)For the period of April 1, 2023, through December 31, 2023, and for the 2024 calendar year, the other per enrollee tax amount for each other taxing tier shall be as follows:
(1)The other per enrollee tax for the other taxing tier I shall be zero dollars ($0).
(2)The other per enrollee tax for the other taxing tier II shall be one dollar and seventy-five cents ($1.75).
(3)The other per enrollee tax for the other taxing tier III shall be zero dollars ($0).
(e)For the 2024 calendar year, the Medi-Cal per enrollee tax amount for each Medi-Cal taxing tier shall be as follows:
(1)The Medi-Cal per enrollee tax for Medi-Cal taxing tier I shall be zero dollars ($0).
(2)The Medi-Cal per enrollee tax for Medi-Cal taxing tier II shall be two hundred five dollars ($205).
(3)The Medi-Cal per enrollee tax for Medi-Cal taxing tier III shall be zero dollars ($0).
(f)For the 2024 calendar year, the other per enrollee tax amount for each other taxing tier shall be as follows:
(1)The other per enrollee tax for the other taxing tier I shall be zero dollars ($0).
(2)The other per enrollee tax for the other taxing tier II shall be one dollar and seventy-five cents ($1.75).
(3)The other per enrollee tax for the other taxing tier III shall be zero dollars ($0).
(e)(g)For the 2025 calendar year, the Medi-Cal per enrollee tax amount for each Medi-Cal taxing tier shall be as follows:
(1)The Medi-Cal per enrollee tax for Medi-Cal taxing tier I shall be zero dollars ($0).
(2)The Medi-Cal per enrollee tax for Medi-Cal taxing tier II shall be one hundred eighty-seven dollars and fifty cents ($187.50). two hundred five dollars ($205).
(3)The Medi-Cal per enrollee tax for Medi-Cal taxing tier III shall be zero dollars ($0).
(f)(h)For the 2025 calendar year, the other per enrollee tax amount for each other taxing tier shall be as follows:
(1)The other per enrollee tax for the other taxing tier I shall be zero dollars ($0).
(2)The other per enrollee tax for the other taxing tier II shall be two dollars ($2).
(3)The other per enrollee tax for the other taxing tier III shall be zero dollars ($0).
(g)(i)For the 2026 calendar year, the Medi-Cal per enrollee tax amount for each Medi-Cal taxing tier shall be as follows:
(1)The Medi-Cal per enrollee tax for Medi-Cal taxing tier I shall be zero dollars ($0).
(2)The Medi-Cal per enrollee tax for Medi-Cal taxing tier II shall be one hundred ninety-two dollars and fifty cents ($192.50). two hundred five dollars ($205).
(3)The Medi-Cal per enrollee tax for Medi-Cal taxing tier III shall be zero dollars ($0).
(h)(j)For the 2026 calendar year, the other per enrollee tax amount for each other taxing tier shall be as follows:
(1)The other per enrollee tax for the other taxing tier I shall be zero dollars ($0).
(2)The other per enrollee tax for the other taxing tier II shall be two dollars and twenty-five cents ($2.25).
(3)The other per enrollee tax for the other taxing tier III shall be zero dollars ($0).
(i)(k)(1)The department may modify or make adjustments to any methodology, tax amount, taxing tier, or other provision specified in this article to the extent that it deems necessary to meet the requirements of federal law or regulations, to obtain or maintain federal approval, or to ensure federal financial participation is available or is not otherwise jeopardized, provided the modification or adjustment does not otherwise conflict with the purposes of this article, or result in an increase in the aggregate tax amounts projected to be collected under this article that the department, in its sole discretion, determines is significant.
(2)If the department identifies that modification or adjustment is necessary in accordance with paragraph (1), the department shall consult with affected health plans, to the extent practicable, to implement that modification or adjustment.
(3)In the event of a modification or adjustment made pursuant to this subdivision, the department shall notify affected health plans, the Department of Finance, the Joint Legislative Budget Committee, the Senate Committees on Appropriations, Budget and Fiscal Review, and Health, and the Assembly Committees on Appropriations, Budget, and Health within 10 business days of that modification or adjustment.
(j)(l)The department shall request approval from the federal Centers for Medicare and Medicaid Services as is necessary to implement this article. In making that request, the department may seek, as it deems necessary, a request for waiver of the broad-based requirement, waiver of the uniformity requirement, or both, pursuant to Section 433.68(e)(1) and (2) of Title 42 of the Code of Federal Regulations, or a request for waiver of any other federal law or regulation necessary to implement this article.
(k)(m)Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement this article by means of provider bulletins, all-plan letters, or other similar instructions, without taking any further regulatory action. The department shall provide notification to the Department of Finance, the Joint Legislative Budget Committee, the Senate Committees on Appropriations, Budget and Fiscal Review, and Health, and the Assembly Committees on Appropriations, Budget, and Health within 10 business days after the above-described action is taken.
SEC. 2.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to implement a new managed care organization provider tax at the earliest possible effective date allowable under federal law, to best position the state to maintain and improve access to care, maximize federal financial participation, and minimize the need for any new reductions to the Medi-Cal program, it is necessary that this act take effect immediately.
SECTION 1.It is the intent of the Legislature to enact statutory changes, relating to the Budget Act of 2023. CORRECTIONS: HeadingLines 7, 8, 9, and 10.It is the intent of the Legislature to enact statutory changes changes, relating to the Budget Act of 2023.
It is the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
|
Date
|
Status
|
|---|---|
| Apr 15, 2024 | Re-referred to Com. on B. & F.R. |
| Mar 20, 2024 | Read second time. Ordered to third reading. |
| Mar 19, 2024 | From committee: Do pass. (Ayes 13. Noes 3.) (March 19). |
| Mar 15, 2024 | Measure version as amended on March 15 corrected. |
| Mar 15, 2024 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.R. |
| Aug 28, 2023 | In committee: Hearing postponed by committee. |
| Jun 26, 2023 | In committee: Hearing postponed by committee. |
| Apr 12, 2023 | Referred to Com. on B. & F.R. |
| Mar 23, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Mar 23, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 60. Noes 14. Page 846.) |
| Mar 21, 2023 | Read second time. Ordered to third reading. |
| Mar 20, 2023 | Withdrawn from committee. |
| Mar 20, 2023 | Ordered to second reading. |
| Mar 20, 2023 | Assembly Rule 96 suspended. (Ayes 61. Noes 17. Page 732.) |
| Feb 2, 2023 | Re-referred to Com. on BUDGET. |
| Feb 1, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on BUDGET. Read second time and amended. |
| Jan 26, 2023 | Referred to Com. on BUDGET. |
| Jan 10, 2023 | From printer. May be heard in committee February 9. |
| Jan 9, 2023 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Mar 19, 2024 | Do pass | Senate Standing Committee on Budget and Fiscal Review |
Passed |
|
| Mar 23, 2023 | AB 136 Budget Assembly Third Reading By TING | Assembly Floor |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Association Of Health Plans | * Indeterminate | Mar 19, 2024 |
| The Western Center on Law and Poverty | * Indeterminate | Mar 19, 2024 |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 136 |
THIRD READING
Bill No: AB 136
Author: Committee on Budget
Amended: 3/15/24 in Senate
Vote: 27 - Urgency
SENATE BUDGET & FISCAL REVIEW COMMITTEE: 13-3, 3/19/24
AYES: Wiener, Allen, Becker, Blakespear, Eggman, Laird, Menjivar, Min, Padilla, Roth, Skinner, Smallwood-Cuevas, Wahab
NOES: Dahle, Grove, Wilk
NO VOTE RECORDED: Niello, Durazo, Newman, Seyarto
ASSEMBLY FLOOR: 60-14, 3/23/23 - See last page for vote
SUBJECT: Medi-Cal: managed care organization provider tax
SOURCE: Author
DIGEST:
This bill modifies the tiered tax amounts for the tax imposed on managed care organizations authorized by AB 119 (Committee on Budget, Chapter 13, Statutes of 2023). The additional revenue received from the modified tax would support a portion of the non-federal share of expenditures in the Medi-Cal program, which is currently supported by the state’s General Fund.
ANALYSIS: Federal Medicaid regulations allow states to impose provider-related taxes on health care service providers as long as certain conditions are met. The revenue from these taxes may serve as the non-federal share of spending for health care services in a state’s Medicaid program, which allows the state to draw down additional federal funding for those services. State Medicaid programs may receive federal financial participation for expenditures using health care-related taxes, as long as the taxes are broad-based, uniformly imposed, and contain no hold-harmless provisions.
AB 119 (Committee on Budget, Chapter 13, Statutes of 2023) reauthorized a tax on enrollment of managed care organizations licensed by the Department of Managed Health Care or contracted with the state’s Medi-Cal program. The tax is assessed per enrollee, and is tiered based on total enrollment in the plan during the base year, January 1, 2022, through December 31, 2022. There are two sets of taxing tiers for purposes of calculating each plan’s tax liability: one for Medi-Cal plans and one for other health plans. The amount of the per enrollee tax in each of the taxing tiers is adjusted during each calendar year, according to the provisions of AB 119. The tax was authorized effective April 1, 2023 through December 31, 2026.
The Budget Act of 2023 assumed the tax would result in a net benefit to the state of $19.4 billion between 2023-24 and 2026-27. Of this amount, $8.3 billion was allocated to support the non-federal share of expenditures in the Medi-Cal program to address the General Fund shortfall, and $11.1 billion was allocated to support targeted provider rate increases in the Medi-Cal program.
This bill modifies the tiered tax amounts for the tax imposed on managed care organizations authorized by AB 119. Specifically, this bill:
- Increases, for the 2024 calendar year, the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $182.50 to $205.00.
- Increases, for the 2025 calendar year, the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $187.50 to $205.00.
- Increases, for the 2026 calendar year, the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $192.50 to $205.00.
- Declares that this bill is an urgency statute, and shall go into immediate effect, to implement a new managed care organization provider tax at the earliest possible effective date allowable under federal law, and best position the state to maintain and improve access to care, maximize federal financial participation, and minimize the need for any new reductions to the Medi-Cal program.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Senate Budget and Fiscal Review Committee:
Modification of the per enrollee tax would result in increased net General Fund benefit to the state of $395 million in 2023-24, $698 million in 2024-25, $467 million in 2025-26, and $102 million in 2026-27. The total increase in the net General Fund benefit to the state over the operative period of the tax would be approximately $1.5 billion.
SUPPORT: (Verified 3/20/24)
None received
OPPOSITION: (Verified 3/20/24)
None received
ASSEMBLY FLOOR: 60-14, 3/23/23
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner Horvath, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NOES: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta
NO VOTE RECORDED: Cervantes, Chen, Maienschein, Mathis, Waldron, Wallis
Prepared by: Scott Ogus / B. & F.R. / (916) 651-4103
3/20/24 16:58:30
**** END ****
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Scott Wiener, Chair
2023 - 2024 Regular
Bill No: AB 136 Hearing Date: March 19, 2024
Author: | |||
Version: | March 15, 2024 Amended | ||
Urgency: | Yes | Fiscal: | Yes |
Consultant: | Scott Ogus | ||
Subject: Medi-Cal: Managed Care Organization Provider Tax
Summary:
This bill would modify the tiered tax amounts for the tax imposed on managed care organizations authorized by AB 119 (Committee on Budget), Chapter 13, Statutes of 2023. The additional revenue received from the modified tax would support a portion of the non-federal share of expenditures in the Medi-Cal program, which is currently supported by the state’s General Fund.
Background:
Federal Medicaid regulations allow states to impose provider-related taxes on health care service providers as long as certain conditions are met. The revenue from these taxes may serve as the non-federal share of spending for health care services in a state’s Medicaid program, which allows the state to draw down additional federal funding for those services. State Medicaid programs may receive federal financial participation (FFP) for expenditures using health care-related taxes, as long as the taxes are broad-based, uniformly imposed, and contain no hold-harmless provisions.
AB 119 (Committee on Budget), Chapter 13, Statutes of 2023, reauthorized a tax on enrollment of managed care organizations licensed by the Department of Managed Health Care or contracted with the state’s Medi-Cal program. The tax is assessed per enrollee, and is tiered based on total enrollment in the plan during the base year, January 1, 2022 through December 31, 2022. There are two sets of taxing tiers for purposes of calculating each plan’s tax liability: one for Medi-Cal plans and one for other health plans. The amount of the per enrollee tax in each of the taxing tiers is adjusted during each calendar year, according to the provisions of AB 119. The tax was authorized effective April 1, 2023 through December 31, 2026.
The 2023 Budget Act assumed the tax would result in a net benefit to the state of $19.4 billion between 2023-24 and 2026-27. Of this amount, $8.3 billion was allocated to support the non-federal share of expenditures in the Medi-Cal program to address the General Fund shortfall, and $11.1 billion was allocated to support targeted provider rate increases in the Medi-Cal program.
Proposed Law:
This bill would modify the tiered tax amounts for the tax imposed on managed care organizations authorized by AB 119. Specifically, the bill would:
- For the 2024 calendar year, increase the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $182.50 to $205.00.
- For the 2025 calendar year, increase the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $187.50 to $205.00.
- For the 2026 calendar year, increase the per enrollee tax for tier II of the Medi-Cal taxing tier, for Medi-Cal plans with annual enrollees between 1,250,001 and 4,000,000 from $192.50 to $205.00.
- Declares that this bill is an urgency statute, and shall go into immediate effect, to implement a new managed care organization provider tax at the earliest possible effective date allowable under federal law, and best position the state to maintain and improve access to care, maximize federal financial participation, and minimize the need for any new reductions to the Medi-Cal program.
Fiscal Effect:
Modification of the per enrollee tax would result in increased net General Fund benefit to the state of $395 million in 2023-24, $698 million in 2024-25, $467 million in 2025-26, and $102 million in 2026-27. The total increase in the net General Fund benefit to the state over the operative period of the tax would be approximately $1.5 billion.
Support:
None on file.
Opposed:
None on file.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 136
Author:(Committee on Budget)
As Amended Ver:February 1, 2023
Majority vote. Budget Bill Appropriation Takes Effect Immediately
SUMMARY
This bill expresses the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
Major Provisions
COMMENTS
According to the Author
Arguments in Support
Arguments in Opposition
FISCAL COMMENTS
VOTES
UPDATED
VERSION: February 1, 2023
CONSULTANT: Christian Griffith / BUDGET / (916) 319-2099 FN: 0000070
Discussed in Hearing
43MIN
Senate Standing Committee on Budget and Fiscal Review
Bill Author
Bill Co-Author(s):