Assembly Standing Committee on Health

Good morning everyone. Happy Tuesday I think it is. I have to stop and think about what day of the week is after a holiday. So welcome to this Joint Informational Hearing of the Assembly Health Committee and the Assembly Budget Subcommittee. Number 1 on Health and Human Services entitled Maximizing the Opportunity for MEDI-CAL MCO Tax Renewal. When we reach the public comment portion of the agenda, we'll be using a moderated telephone service. The call in for public comment for this hearing is 877-692-8957 and the access code is 1850-1100. I'll read this again and we'll do this again probably before we open for public comment. Once it again, the number is 877-692-8957 and the access code is 1850-1100. You can also find this on the Assembly Health Committee's website as well as on your TV screen. The operator on the line will give you the instructions on how you'll be placed into the queue to provide your public comment. If you're calling in, please eliminate all background noise. This includes muting, your live stream broadcast and your smart devices to reduce the sound distortion. Once you're placed in the queue, you will be asked to mute yourself until you are called upon to speak. Also note that we are accepting written public comment through Health Committee's public email AHEA.Committee@Assembly.CA.Gov, which can also be found on our website. And of course if you're in person you can provide testimony in person. So I appreciate everyone coming together to discuss this proposal for the renewal of the MCO Tax that has enjoyed support from this body over the years going back I believe to 2005 or 7, 5, I think. The Administration's proposal for MCO Tax renewal represents a watershed moment for all of us with the opportunity to make tangible, bold and meaningful investments in MEDI-CAL. I appreciate and acknowledge the Administration's hard work to get us to this point, working through the details of this tax and bringing it forward. Also very much appreciate that the Administration has recognized the importance of using these revenues to invest in building a strong medical program. I agree with the immediate investments the Administration has proposed as a down payment, but I believe we must do more in order to really make a difference on the ground. For instance, the Administration has proposed a very long time horizon for these investments which I believe would significantly water down any impact of these new funds. I understand the call for fiscal caution and know it's a shared responsibility to deliver to our constituents a balanced budget now and in the future. We know we are in a period of fiscal uncertainty likely for future years and projected deficits, but we have real needs right now. We have vulnerable small and rural hospitals that will close unless we provide them with help to meet their seismic safety obligations, cutting off access to medical beneficiaries and entire communities. I can see the writing on the wall and we need to address these issues urgently. The MCO Tax is not a silver bullet. It can't solve all of our issues in MEDI-CAL. We do need to be thoughtful and targeted with our investments to make a real difference. But this represents an unprecedented opportunity to shore up the foundations of the medical program and know how important this is to all of the members here. I look forward to discussing how we can make the most of this opportunity. Which investments? Over what period of time? What outcomes do we want to see? I look forward to being active partners with the administration at the table as we make these decisions. The hearing today is intended to help our members understand the Administration's proposal as well as the broader context, identify key issues for legislative consideration and hear perspectives from interested stakeholders and the public. The LAO has kindly prepared a background handout for this hearing. I urge you to read that. It's very well done and it has a lot of really important details. And with that, I'd like to invite my fellow Chair, Dr. Arambula, to offer some introductory comments and then we'll go on to our first panel.

Good morning. I'll start by thanking Health Committee Chair Dr. Wood for his interest in the quality of the medical program and for his initiative in helping to organize this meeting here today. I would also like to thank our panelists and participants in this hearing. Your commitment to the medical program is inspirational to my legislative colleagues. I hope that this hearing helps to demystify and simplify the MCO Tax and helps to address any lingering discomforts you may have in supporting it. Finally, I want to encourage all of us to roll up our sleeves and get ready to do the hard work that's required to get this right, to set us on a path that we can all agree will be transformative to both quality and access in the medical program. Nearly one third of Californians are depending on it. And let's get to work. Thank you.

Thank you very much. We'll go ahead and invite up our first panel, a panel of one Jason Constantouros, the Principal Financial, Fiscal and Policy Analyst for the Legislative Analyst Office. Whenever you're ready, sir.

Just to check to make sure my mic is working.

I can it's working great. Thank you, Jason Constantaros. LAO, I'll be taking you through issue one, and we'll be working through this LAO handout here. That should be in your materials. For issue one. We're going to go about halfway through the LAO handout and then we'll stop and we'll move to issue two and have the administration and introduce its proposal. If you turn to page one of the agenda of the handout, it provides just a quick overview of what we'll be covering on issue one. The purpose of this item is to provide key background on the medical program, how medical pays providers, and the MCO Tax. Turning to page two of the handout, we provide some basic information on the MEDI-CAL program. I think many of you are familiar with the basics, but just to quickly go over it, medical is effectively the state's Medicaid program. It is a joint state and federal program and it provides health coverage for low-income individuals. Currently, it covers health care for about 40% of the state's population. So it is a significant part of the state's healthcare sector. Medical is a very complicated program and it delivers services in many different ways. The primary way is through its managed care system. Under MEDI-CAL managed care, the state contracts with health insurance plans. Beneficiaries enroll in these health insurance plans and the plans are responsible for arranging for the care of their beneficiaries. The state makes monthly payments to these health insurance plans to cover the cost of providing health care services. Throughout this presentation, we'll also refer to health insurance plans as managed care organizations or MCOs. Traditionally, the other major delivery system in MEDI-CAL is known as fee for service. This is where the state pays providers directly for providing services. Historically it was the primary delivery system, but over time the state has shifted more beneficiaries out of fee for service and into managed care. Today, around 6% of MEDI-CAL beneficiaries are in the fee-for-service system. And then finally, it's important to keep in mind that even though most beneficiaries are in the managed care system, some services are still provided to managed care beneficiaries outside of managed care. A good example here is behavioral health. Counties play a key role in delivering behavioral health services to beneficiaries in Medical. Turning to page three of the Handout, you'll see a short summary of MEDI-CAL's budget. So as I noted, MEDI-CAL is a joint federal and state program and so its budget is also jointly supported by federal funds and state funds. The way this works is the federal government agrees to pay a certain share of the cost and then the state is responsible for paying the remaining share. Federal funds have been historically more than half of MEDI-CAL's budget. And then when it comes to the state share, the state has used a variety of different sources. A key source of that has been the state's general fund, but also state special funds and funding from local governments. And as you can see in that figure, the MCO tax also has been a key source of support for the MEDI-CAL program. Turning to page four, we provide some information on how MEDI-CAL pays providers. This will become relevant when you start hearing about the administration's proposal. It's easiest to understand how this works in the state's fee-for-service system. In this case, the state pays providers directly and sets those rates to providers for many of these rates. Historically, they've initially been set at 80% of what Medicare would pay for these services. But many of these rates are not adjusted for inflation and so over time, many of these rates have lagged behind that threshold. In that first paragraph, we give some examples of where the payments have lagged. In the managed care system, things are a bit more complex. The state pays the managed care plans to provide services, but the managed care plans are ultimately responsible for paying providers. It's our understanding that managed care plans typically use the state's fee-for-service system as a starting point to set rates, but that ultimately, payments to providers do vary quite a bit across the state, and those reflect different arrangements that managed care organizations have made with their providers. We also want to note that in addition to these baseline payments that are provided to providers through fee-for-service and managed care, the state also provides supplemental payments. These come on top of those payments, and they're delivered both in fee-for-service and in managed care. If you turn to page five, we just note a few key developments that have happened in medical's provider payments. For the sake of time, I'm just going to focus on the first two paragraphs, because those are the really the key issues that are affected by the administration's proposal. So on that first paragraph, as part of the Great Recession, as part of a budget solution, the state enacted 10% reductions to many provider payments in medical, both in fever service and in managed care. These reductions are referred to as AB 97 reductions. AB 97 was the trailer bill that enacted them. Over the years, the state has eliminated some of these reductions and restored full funding. And under the Administration's proposal, as you'll hear in a minute, some additional reductions would be eliminated. Just for informational purposes, the very last page of this handout has a short appendix table that summarizes what reductions would remain were the Legislature to enact the Administration's proposal. The other major adjustment we wanted to note is in that second paragraph on Proposition 56. Proposition 56 was enacted by voters in 2016, and it increased taxes on certain tobacco products. Most of the funding from that tax goes to the MEDI-CAL program, and the state has primarily used the funds from this to provide supplemental payments to providers. Again, you'll hear in a moment how that interacts with the Administration's proposal. Turning to page six, we provide some information on the MCO tax. Again, this is just a description of how the MCO tax works, understanding that you'll hear from the administration enrollment on its specific proposal. Now, the MCO tax in some sense is a somewhat simple tax. It's a tax on the health insurance industry and more recently, on enrollment. So as enrollment increases in health insurance plans, their tax liability tends to increase. What's unusual about the MCO tax relative to many other taxes, is that the purpose of the MCO tax is really to draw down additional federal funding and impose a relatively small cost on the health insurance industry. The way this works is the state charges the tax on the health insurance industry on its enrollment. It imposes a tax on MEDI-CAL enrollment and commercial or private sector enrollment. The tax on MEDI-CAL enrollment is much larger than the tax on commercial enrollment. For the tax on MEDI-CAL enrollment, MEDI-CAL covers that cost. Now remember that MEDI-CAL is a joint state and federal program. So more than half of that coverage from MEDI-CAL is coming from drawing down additional federal support. And then the remaining portion is covered by the state using a portion of MCO tax proceeds. This additional federal funding is key to why the MCO tax provides a fiscal benefit to the state. Without this federal funding, there would be no fiscal benefit. The state would charge the tax and then most of the proceeds would return back to the health plans. But because the federal government is covering a portion of this cost, that provides a fiscal benefit to the state. To help illustrate this, if you turn to page seven of the agenda. That table summarizes the most recent version of the MCO tax. This version started in January 2020 and ended at the end of December 2022. So it started halfway through the fiscal year 2019-20 and ended halfway through the fiscal year 2022-23. As that table shows, that tax generated annual revenue of over $2 billion. But after accounting for the portion of the funds that helped to cover the cost of the tax on MEDI-CAL enrollment, the net fiscal benefit to the state was more like 1.5 to 1.7 billion dollars a year. Again, it's less than those in the first and the last year because it started halfway through and ended halfway through those years. And then, as you can see, most of that fiscal benefit is coming from the federal government and coming from additional federal funding. Again, a small portion is coming from the tax on commercial enrollment, but that's much smaller relative to the total fiscal benefit. And then importantly, you might ask the question, well, how has the state spent this fiscal benefit? Well, traditionally, the state has used this fiscal benefit to maintain MEDI-CAL's existing budget and fund existing services in MEDI-CAL. What this means is that without the MCO Tax, the general fund has had to backfill that lost net fiscal benefit and cover those costs in years. Where there is an MCO tax, that general fund backfill isn't needed anymore and is freed up and available for other priorities. This is important because, as you'll hear in a minute, the Administration is proposing a somewhat different arrangement using some of the net fiscal benefit to offset general fund spending in MEDI-CAL, but also use some of that benefit to augment MEDI-CAL's budget. If you turn to page eight, this is our final page on issue one, and it provides some information on federal rules around approving the MCO Tax. Now, this adds a layer of complexity in addition to designing the tax and understanding in a way it supports the medical program, the state also has to get federal approval to use the tax to draw down additional federal Medicaid funds. We provide a really short summary of how these federal rules work on that second paragraph on page eight. But I would emphasize this is a very high-level summary. The federal rules are a lot more technical and complex. I'll give you an example. A lot of the rules aim to ensure that the tax does not fall too disproportionately on Medicaid as opposed to non-Medicaid services. Now, the federal government determines this using a series of mathematical tests. And the state has been able to design the MCO Tax in a way that meets those mathematical requirements but still ensures that most of the taxes on medical as opposed to commercial enrollment also, you'll see that the Federal government prohibits hold harmless arrangements in order to get the tax approved. But that requirement does not prohibit the MEDI-CAL program from covering the cost of the tax on MEDI-CAL enrollment. What it does is it enacts a variety of other hold harmless rules, for example, limiting the state's ability to hold harmless health plans on the tax on commercial enrollment and also enacts various other rules like limiting the amount of revenue the state can generate from that tax. So again, there's a lot of technical rules here that are sort of behind the scenes here. We'd also want to emphasize that the federal approval is limited term. And so the MCO tax has been approved by the federal government for periods of time, two to four years or so. And so state authorization also has been limited term too. This is why the most recent version sunset and then just finally wanted to emphasize that the federal rules create a lot of uncertainty when thinking about the MCO tax. For example, the state in some years has adopted an MCO tax, submitted it for approval. Then the federal government denied approval of that initial structure, requiring the state to go back, rework the structure, resubmit it for federal approval. In addition, the federal government over the years has contemplated changes to its rules around approving the tax. Some of those changes have been adopted, others were not. And this always remains an area of uncertainty even in the future. So that means that a tax that might have been approved in one year might not meet federal rules moving forward to the extent those rules are changed. So again, that concludes our presentation in issue one, available for questions.

I believe we're now going to have the Administration come forward and present the MCO proposal. We'll then follow with the LAO's evaluation of the MCO proposal and then have questions from members here on the dyess. We will begin with Director Michelle Baass and Jacey Cooper, the Medicaid Director for the State of California. Begin when you are ready, members.

Morning chairs. Members Michelle Baass director of the Department of Healthcare Services. The department is proposing to implement a new managed care organization. Tax effective April period to be sustainable over a long period. And of that $11.1 billion.

It in additional revenue. We would note that the federal government has declared their intention to change federal regulations, as the LAO noted, associated with healthcare-related taxes, to require that taxes be more proportional in their Medicaid and non-Medicaid liabilities. Thus, the Department does not anticipate an MCO of this size will be available in the next kind of round of reauthorized patients. In terms of the proposed provider rate increases, we are proposing that effective January 1, 2024, an increase to at least 87.5% of Medicare for primary care, maternity care, and non specialty behavioral health services.

Director Bass, give us just a second. It appears that over the Internet, they're having a hard time picking up your Mic. And so I'm wanting to give Tech a second to see if we can figure this out. I just want to make sure that everyone is capturing what you're saying. Director Baass, I may ask that you move over just a seat and use the one that Jason with the LAO used as that one was capturing. Please begin. And I may ask you to begin again at the start. Since no one over the Internet who was watching was able to capture that people who were here were, but so that the public is able to participate, I'll ask that you begin again. Director Baass.

Good morning. The Department is proposing to implement a managed care organization tax effective April 1, 2023 through December 31, 2026. This tax will provide a 19.4 billion in net revenue over the three and three quarter year period, which is roughly three times higher than the 6.5 billion proposed at Governor's budget. These funds will help maintain the MEDI-CAL program. Of the 19.4 billion, 11.1 billion is projected or proposed to be used to invest in additional rate increases and investments in the MEDI-CAL program over an eight to ten-year period. So about 60% of that 19.4 billion revenues as additional investments in the MEDI-CAL program, and then 8.3 billion in funds to support the MEDI-CAL program as it is today. Given the state's budget challenges, extending the expenditures of investments over the eight to ten-year period will provide additional certainty to our providers with regard to these rate increases being available for the long term and wanting to improve our access, quality and equity in the MEDI-CAL program. We want to build a foundation with these investments and certainty per providers that these rate increases are sustainable. We would note that in our discussions with CMS, the notion of reinvesting this revenue generated by the MCO tax into expanding access and quality in the medical program has been key to CMS's acceptance of a tax size this large. To secure an April 1 effective date, we must submit this proposal to the federal government by the end of June so that we can go retroactive to the beginning of the quarter. We would note that CMS has declared its intentions to change federal regulations associated with healthcare-related taxes to require that taxes be more proportional with regard to the tax size on the Medicaid side versus the non-medical side, as the LAO noted earlier. So as such, we do not anticipate an MCO tax size at this large that will be part of the 2027 renewal package. In regard to provider rate increases that we are proposing in the May revision, we are proposing a January 1, 2024 effective date for rate increases in primary care, maternity care, non-specialty behavioral health to 87.5% of Medicare. This is in alignment with our comprehensive quality strategy and clinical focus areas on prevention, maternity care and birth equity outcomes and behavioral health integrations and really focusing on upstream preventive efforts to really address the needs of our medical program and ensure that their needs are addressed as early as possible. Again, these rate increases will be built into the base medical rate to ensure sustainability, efficient and consistent payment to our providers without the need for reconciliations that are needed through supplemental payments and to really ensure consistent reimbursement over time for the applicable services in primary care, maternity care and nonspecial behavioral health. These rate increases will also include the elimination of the historical AB 97 reductions and the shift of Proposition 56 supplemented payments into the base rate increases. So again, building that base rate, that foundation of our payments to these providers to really ensure increased access and quality care, the Department will annually review and revise the fee-for-service reimbursement rates for these services. Based on changes on the Medicare side, we will direct our medical managed care plans to pay providers at least these rates for services. In addition to this first phase of rate increases that we proposed for January 1, 2024, we will be coming back with a proposal at next Governor's Budget for future rate increases in 2025 really in the space of primary care, maternity care, behavioral health and on specialty behavioral health, specialty care, acute care and outpatient care. Again, also with the focus of addressing the needs and disproportionately impacted communities as we think about additional rate increases for those communities to ensure access and available care, our goal in comprehensively looking at our structure is to really identify the providers where we know a deep commitment to rate increases is needed to ensure access. And I know we have many providers that will be speaking to us later today, but really wanting to ensure we're able to identify targeted investments that are going to make a difference in our MEDI-CAL members lives. Take any questions?

We'll now go back to the LAO.

I just wanted to do a Mic check on this new Mic. Great. Also, just in case this is helpful to folks on the second half of our agenda, the first few pages walk through the proposal, which you've just heard the administration introduce, so we won't go over those pages at length, but did want to note that there are a few tables there that are helpful in case you missed them on page ten that summarizes the proposed MCO tax rates, both in the most recent version that recently ended, and then the Administration's proposed MCO tax rates. Again, you can see there that the tax rates are on the medical side, are much larger, which is generating a much more substantial fiscal benefit relative to the most recent version. Then also wanted to note page twelve is a summary of the proposed MCO Tax, the revenues, the net fiscal benefit, but then also how the Administration plans to spend that net fiscal benefit. Again, you can see a substantial portion going to offset general fund spending in MEDI-CAL, but then also some portions available for augmentations in medical. So just wanted to make sure those tables were clear. So starting on page 13 of our handout, we do give some issues to consider around the MCO Tax. There really are two key areas. The first is around the tax itself, should it be renewed, and if so, how should it be structured? And then the second area of considerations are how to spend that net fiscal benefit. So on that first area on page 13, I just want to note that the MCO Tax provides a substantial fiscal benefit to the state and the MEDI-CAL program at a relatively small cost to the health insurance industry. And so we think for those reasons, renewing the MCO Tax warrants serious legislative consideration. We also want to emphasize that the proposed MCO Tax is a key component of the Governor's May Revision. And so to the extent it's not renewed, that would require additional solutions elsewhere in the budget to help address the budget problem. And then in terms of how the MCO Tax should be structured, we haven't raised concerns with how the Administration is proposing to structure the tax, but to the extent the legislature is considering alternatives, just want to provide three key goals to keep in mind. The first is to ensure that any MCO tax provides a sizable fiscal benefit to the state, that the tax also stands a reasonable chance of receiving federal approval, and that the tax provides stable and predictable funding to the MEDI-CAL program. Turning to page 14 this in the next page we give some issues to consider around how to spend the fiscal benefit. And I want to emphasize here that a key consideration for the Legislature will be the State's existing budget constraints. The members of Assembly Budget chatted a little bit more about this last week, but our office released our outlook of the Governor's May Revision Proposal and project in that budget shortfalls of around five to $20 billion each year. We think this has important implications for how you view this MCO Tax proposal. First, the legislature would want to consider how much of the tax should go towards addressing the budget problem versus augmenting MEDI-CAL's budget. I just want to emphasize here that any funds that are used to augment MEDI-CAL's budget would would then not sort of be available to address the budget problem. So that is that is a key sort of consideration for the Legislature, at least on a fiscal sense. And then in terms of what augmentations should be considered in medical, again, you'll hear from a lot of stakeholders on their ideas, but want to emphasize that to the extent that these augmentations are ongoing and to the extent that the MCO tax is not as large next time around as this proposed one. That would create budget pressure for the General Fund moving forward. And so that would be something the Legislature would want to consider. One way to mitigate some of this budget pressure would be to consider more limited-term uses like supplemental payments or creating a reserve for economic uncertainty. But again, these are some of the key decisions that the legislature will want to consider. Moving to page 15. Another key decision point will be over what period of time to spend the funds. Should it be over eight to ten years as proposed by the administration, or over a shorter time period? And this longer time period is intended to help manage that sort of fiscal cliff from a future task tax not being as large as this proposed one. And so we think for that reason, it does warrant consideration. That said, to the extent that it is spread out over this period of time, that would presumably provide less of an impact than if the funds were spent over a shorter period of time. So that is a key trade-off the Legislature will want to contemplate. We also want to emphasize that future decisions from the federal government around changing the tax are uncertain, and so that creates some uncertainty as you're thinking about what the fiscal cliff will be that the state is facing. And then finally, we want to emphasize that regardless of what decisions the Legislature will make, it'll want to ensure that it is able to be an active participant in how the funds are spent in the design of the MCO Tax. We have a few ideas here on how to enhance that participation. For example, a key part of the Administration's proposal is to sort of study the issue more carefully and come back next year with a complete proposal on what augmentations to support. We think the Legislature could adopt more clear parameters around the kinds of things that the Administration would report back to that would allow the Legislature to assess the administration's proposal, but also allow it to weigh that proposal against other options. We also think that there are ways the legislature could tighten the rules around whether funds are transferred between the different special funds that are created in this proposal. At the moment, the administration has a lot of flexibility to do that. That arrangement has worked okay in the past because the funds were used for just one purpose which is to replace General Fund support for the medical program. But now that the administration is proposing multiple uses, that could warrant more legislative control over how the funds are allocated, with that available for questions.

Very good. Well, thank you. Thank you to both panels. I do have questions, but I want to see if you want me to go first. Okay. All right. Well, thank you. First of all, appreciate both. I have some prepared questions, but I want to go back and clarify a couple of things. And this is for you, Jason. Actually, both Director Baass can chime in on this as well, but if the package has to be renegotiated, for example, if the federal government decides that this doesn't work for us, does the legislature have any role in the consultation about that restructured package as it stands?

Yeah. Obviously, the Administration can speak to its proposal, but my understanding is, the way the proposal is designed, there would be a notification. The Administration would have to consult with stakeholders on how that tax is redesigned, and then there would be a ten-day notification process to the Legislature on the revised version. Again, happy to the Administration has more to add on how it's proposed.

Yeah, I think that's a good reflection. Typically, what we do is we would get any concerns from the federal government. We would essentially make changes to the model, resubmit it to them, make sure that that would be amenable, and then we would provide proper notification to everyone regarding the change. This is similar to what happened in 2020.

I would note, though, this is the first time that we've engaged with CMS prior to having it finalized. So we've been engaged with CMS on this model since February. So that's not typical of the process of engagement with CMS.

Yeah, we've already made pretty substantial changes to the model in those back and forth conversations with the federal government.

Okay. I'm curious. I'm looking at the appendix on page 16 of the MCO's Report. So, Director Baass, you said elimination of Prop 97, but my understanding is you're not eliminating all of them unless I heard you're not eliminating all of them.

Only those related to primary care, maternity care, and non specialty behavioral health.

Okay.

As part of the 87.5% May revision proposal.

So I'm puzzled by that because it's unusual that we would turn away federal money. My reading of this appendix is that this is a $54 million expenditure, but there's $150,000,000 in federal funds on the table. Why would we not want to take advantage of that? I mean, this is a small group and it's a small amount of resources, and these are people that have these cuts happened a long time ago. Why not make everybody whole.

In terms of essentially eliminating all?

We've been pushing towards this for years. Why the reticence here? Why?

So our proposal for this first round of tax of increases that go live January 1, 2024, is really because they support our clinical focus areas and our comprehensive quality strategy with regard to primary care upstream intervention. And so it's in align with what we proposed at Governor's budget related to the designated state health programs, the Dish B rate increases for those three areas, really trying to support our clinical focus areas and be aligned in those efforts.

So clinical laboratories, ground medical transportation, getting people to places, pharmacy medical supplies don't support that mission? Is that what you're saying?

That primary care and maternity care are more in line with kind of where our comprehensive quality strategies, clinical focus areas are and kind of our priorities for the department.

And primary care doesn't use clinical labs and ground transportation to get people. Do you see where I'm going?

I think the case could be made for all of the different provider types that are requesting rate increases. And so we've just actually not a.

Rate increase, they're actually just requesting parity with the others back to remove the cuts.

I think it's kind of from our perspective, it is almost like a rate increase because it is adding to their rate.

Not if you've been one of those providers waiting for the last ten plus years to be restored when everybody else has been restored. I know I'm belaboring the point here, but I'm a little frustrated with that when we're talking about billions of dollars here and the ability to draw down $150,000,000 in federal funds. I don't get it, quite frankly. And if you're saying that you're open to that in the future, that's a different story. But that's not what I heard. I just heard that the first are you open to eliminating those cuts in the future?

So as part of our first phase, we are focusing on primary care maternity.

That wasn't the question.

Sure. And I mean, I think as part of the next phase we've alluded to this is where we're going to look at kind of more information, more details on what our actuaries tell us with regards to how rates compare to Medicare.

You've said there's how the concern that the federal government is going to change things. I do remember hearing in the past was always concerned the Federal Government was going to change things. I remembered this back the first time I went through this as well. You said more proportional. Walk me through what that means and what do you expect that could mean to the future size of an MCO tax.

Sure. And we agree the federal government has been saying this for a while. They did emphasize it pretty significantly by the Director of CMCs himself to California in these conversations. So I just want to be clear. We're not stating that based on previous statements over the administration, that was in a recent conversation with our federal partners. Essentially what that means is as Jason actually did a great job of outlining the model where we have the higher tax on the Medicaid portion versus the non-Medicaid portion, essentially making that a more proportional tax across it. Does pretty significantly reduce the general fund gain that the state can have, given the way that we do the tax in the model and how it works. And so if you do get to a more proportional model, it's hard for us to completely know what that looks like at this time because we haven't seen what the federal regs would change to. We don't know what their test would be. We can only play with the models that we have to see. If you get to what a more proportional model is, maybe a size similar to the number of lives in the state of California in each of the respective it can seriously switch over in regards to the amount of General Fund gain for the state of California. It would be smaller than not only this proposed tax for sure any of the previous approved taxes because we have always had a substantially higher amount of tax on the Medicaid side versus the non-Medicaid side in all of our approved MCO taxes in California. And so we're trying to just flag that as a concern so everybody takes it under consideration when making final decisions.

So as I mentioned when we began, I believe the investments over eight to ten years severely limit the potential impact. So what potential impact could we have on the MEDI-CAL program and those enrolled in the program if we made bolder investments in a shorter period of time, say four to five years?

So I don't know. I can specify the impact. I will know. I mean there's big room between three and ten years and I know conversations are continuing on the time period of the spend. But just recognize we do want to build the foundation and that certainty for providers that those rate increases are sustainable.

And I guess my concern is always this we'll give you a little bit over a longer period of time, but that's not enough to make it really work. I mean if the idea is to stabilize the once you lose providers, you lose providers. I mean it's really hard to get them back. So if you can get them to a certain level quickly, I think you have a much better chance of keeping them for a longer period of time. But if it's just a little bit of an impact that provider is going to have to sit back and decide is this worth it for me or not? And I recognize there are some categories like obstetrics in particular, that have been historically really underfunded and that certainty is really important. How do we know this 87.5 number is the magic number? How do we know? I'm concerned especially for these services, they already have a Prop 56 supplemental payment. Now that's going to go into predicting setting the base rate now, which I have mixed feelings about, quite frankly, because one of the big reasons Prop 56 came along was because we couldn't get provider rate increases. And that was a tool. And then that tool and some of that money has been taken over the years away from its original purpose. But how do we know this is actually going to make the meaningful difference to these providers? Where are the numbers to support that? This is a magic number.

I think part of this is the first step and kind of where we feel comfortable in terms of knowing the size and scope of this investment. We did a rigorous analysis over the fall to support our Governor's Budget proposal with regard to what was proposed related to the DSH-B program and the need to do that to get Federal approval for our CalAIM waiver. And so we have a good sense for how those rates compare to other payers and to Medicare essentially. And so recognizing that Medicare is often used as the standard of rate payments, using that as kind of a proxy to establish where we think we need to go, in particular for maternity care, we knew that we are about 60% of Medicare and recognizing that that is a significant investment in the support of those providers.

Have we done any studies on this or is this just a guess? Yeah, we're going to get it up to this level and hope that happens. Do we actually have data that suggests that this will actually happen?

I think for the Jan 1, of 24 proposal, essentially the way we looked at it is raise all boats and kind of have a standard across those three main components, knowing that we would be looking at potential additional augmentations in the Jan 1, of 25 proposal to figure out potentially, as you've seen in our memo, should we have various equity bumps, for example, in physician shortage areas or parts of the state where the HPI index is one or two or lower? More complexity just to have it higher. That takes more time to do true analytics. In regards to where you would have something above that 87.5, I would just note that the federal government has come out recently with an access rule indicating as a benchmark for Medicaid at least 80% of Medicare. Now that doesn't completely give you a response to your piece, but that at least is where the federal government is looking at and essentially proposing transparency across the board for essentially Medicaid agencies to publicly make available where we are stacking up against 80% of Medicare. But again, I think we would be looking at additional augmentations in the next budget for those areas depending on where the stakeholder engagement and conversations land in regards to that. But we did want to at least lift all boats. The other thing I would just note to just make sure that everybody understands Prop 56 is only on certain codes and what we are doing is all of the codes under primary care, OB and non-specialty mental health. So it does lift up some rates that aren't caught up or haven't historically had that additional bump, and so that you will see some that historically haven't received that in this augmentation as well.

So when you do these studies, I guess, for lack of better description, I'm assuming you'll be doing studies on this for the next fiscal year.

We will be looking across the board of where we are paying what that increase would look at, how we would want to do the additional pieces, as a director boss mentioned, for the 2025 proposal.

And how does potentially the Legislature interact with you on that? Does that come to the Budget Subcommittee? Do we talk about that?

Yeah, that would be part of next year's Governor's Budget Proposal. So just like every other budget proposal. That's before you would be part of kind of the legislative process.

Okay. Because my understanding is, the way this is drafted, this is all continuously appropriated.

The rate increases. The January 1, 2024 rate increases. Yes, those would be so we would always just pay those rate increases as outlined in the trailer bill for primary care.

And I'd like to turn to the LAO on that, because I love to hear ya.

I just want to emphasize, so the MCO tax, the proceeds normally go into a special fund as this proposal. This proposal would create two special funds. One would be the primary special fund that the proceeds are placed into, but then there would be a separate reserve for future augmentations, and that would be a separate account. Both of these accounts are continuously appropriated. Now, the rate increases, that would begin January 2024. There is language there that says that that is subject to appropriation. So that would be part of the budget that's adopted this year. But the future augmentations at the moment are continuously appropriated. And so the way it's structured, the administration would return next year with a proposal to spend that augmentation, but the funds would be continuously appropriated. And so there would be some uncertainty. Would this be a trailer bill that would be adopted, and then that would just sort of pay for the cost, or I think there's still some uncertainty as to how that approval would work, given that the reserve is continuously appropriated.

Considering that as part of our ability to have some say in the matter, I mean, what does the LAO have any suggestions for guardrails? What I don't want to see is this separate fund for future rate increases or whatever to just suddenly get swept away without the ability for the legislature to because I don't feel like there are sufficient guardrails, quite frankly.

I would emphasize that any action taken today can be overturned in next year's budget. That's an issue that the Legislature always faces. There are some actions that Legislature could take that would provide some guardrails, for example, it could offer more clarity about the amount of funding that is in the reserve versus being used to offset the general fund. You can see that in the table, what's being proposed by the Administration, but it's not detailed in the trailer bill legislation. So that that could specify how much funding is going into the reserve. You could also revisit some of these continuous appropriations. You could make the reserve subject to appropriations so that would give the legislature more control over how the funds are spent. My understanding is that these continuous appropriations have been used in the past because it ensures that the Administration is able to sort of claim federal funding in a timely way. So that would be something that Legislature would want to work with the administration on. But those are some actions a legislature could take to put more Guardrails in place to protect that reserve and protect the augmentations.

Well, thank you, I've taken up enough time here at this point, but I'm going to go ahead and pass to other members I know Mr. Fong, and then it looks like with lots of questions. So, anyway, Mr. Fong thank you, Mr.

Chair. First I wanted to focus on, to the Leo on what you wrote in page 13. There's a sentence that stood out to me which states accordingly, without the MCO Tax, the Governor's budget would be out of balance by 3.4 billion in 20, 23, 24, necessitating additional budget solutions of a like amount. With the history of the MCO Tax, my understanding is that when the MCO tax structure was created, it was supposed to support the medical system. So explain to me now, we've kind of been flippant about it in our conversations, but this idea that you just impose a tax on health plans and then somehow just throw it into the general fund to balance the budget. To me, it seems that it's a diversion that probably should be more focused on and we should be focusing more attention on that. So explain to me the purpose of the MCO tax and the use of some of it for the General Fund.

Yeah, so the MCO tax, when it was adopted in past versions of it, it's generated tax revenue. That tax revenue has gone into a special fund which is used to support the medical program. Now to your point, the funds have been used to maintain funding for medical's existing budget in years where there's no MCO tax, that means that the general fund has to sort of COVID that cost. But with the MCO tax, that frees up that general fund support for other priorities. So the funding is going to the medical program, but the sort of net effect of that is it frees up general fund support for other opportunities in medical or outside. So that is sort of how that process works.

Okay, are you saying that the MCO tax isn't being used for non-healthcare purposes? I just want to make sure I got that.

Well, yeah. Now that's, I think a key issue to think about. So the MCO Tax does free up General Fund support because it's freeing up overall general fund support. Exactly. What is that freed-up funding being used for? You could argue it's going to help support augmentations in the medical program. You could argue that it's being used for other General Fund purposes because it's freeing up sort of overall General Fund support. It's hard to pin it down on one specific.

So it's unclear. Once that General Fund support is released, we don't know where that general fund purpose where those General Funds goes over to.

Its kind of to overall support the General Fund for the purposes of the May Revision. I think it's fair to think of it as a budget solution. It's going to help address the budget problem, I think, if that's a helpful way to think about it.

I think that's what gives me pause is that I'm not sure the MCO Tax was ever designed to just fix a budget solution. And maybe that's where I'm broadly taking a step back. That's where I think there is a little concern maybe I've become a little jaded since the seven years I've been here, but the idea that things in the past, before my time has been used for budget solutions has created problems in the healthcare space, whether it's prop 56 or other things. So I don't know if that makes sense.

I think that is a key decision point for the Legislature. How should this fiscal benefit be used? Should it be used to free up General Fund support? Should it be used to augment the medical budget? Should it be used for a mix of both? That's what's being proposed by the administration. Historically, the MCO Tax has been solely used to offset General Fund support. So in that regard, it would be consistent with its past use. But that is a key decision point for the Legislature. Does that make sense or does it want a different arrangement?

And I think that's a broad question that we're all having as a Committee, is that if we're going to assess a tax on the health care plans, most, if not all of the money should stay in the health care system in some way is to ensure that it's used for that purpose. So I thank you for that. Let me jump to the.

It to Director Baass first. Thank you for the time you gave me last week. In terms of walking me through the proposal, I did want to kind of revisit some of those areas. First and foremost is the stakeholder process. I think you and I had this conversation. Maybe you can just outline to me, it seems to me, and correct me if I'm wrong with this assessment that you're asking the Legislature to approve this tax measure. And then there's a stakeholder process in the following year. And it seems to me that that should probably run, that should be together instead of one after the other. So walk me through what the stakeholder process looks like.

Sure. So we're proposing the tax kind of separate from the rate increase piece because we need to get this to the federal government in order to have this approved or to CMS by June 30, to have it retroactive to April 1, which is key in terms of the size of the MCO. We're proposing two phases of the rate increases. One, starting January 1, 2024, that is part of kind of the May revision proposal, and then a following over a stakeholder process. And really, because we need to get some Actuary data with regards to the rates over the summer, then coming back next January with an additional proposal for additional rate increases in January 1 of 2025.

So then you're telling me that there's going to be a first set of providers and then another set, but who determines the other set of providers?

So we've kind of outlined some of the key areas that we think we would be focusing on. It's part of our kind of our materials related to this MCO and related to the provider rate increases, primary care, maternity care, non-specialty, behavioral health, specialty care services, outpatient and acute care ER, for example. And so we just, based on some of our preliminary look at the data in terms of rate increases and rate levels today, those are areas that are areas that we want to have further discussions with our stakeholders on in terms of how to design a proposal for January of 2020.

And I think this is my point. I think I'm trying to facilitate some transparency around the sacred process. So are the plans going to be part of this process? Are entities outside that haven't been part of the process so far, would they be included? So let's pick your specialty, whether it's optometry or something else. What does that look like? Is everyone in the healthcare space going to be invited to participate? Is there a process to pick which other stakeholders will be part of the process?

I think that the first piece will be looking at the data and what the data shows us in terms of where our rates are today and kind of starting that as the basis for how to have these conversations. Again, we don't want to spread the rate increases to give everybody a 5% rate increase. We really want to make some meaningful impact to our providers where we know we want to increase provider participation, increase access, whether it's by provider type or geographic and Healthy Places Index, for example. And so that's how we're going to start the conversation and kind of looking at the data to see where it's kind of directing us to really take a deep dive and then engage with the stakeholders in each of those different areas.

So let me then turn to the LAO in terms of the stakeholder process in ensuring that we kind of understand what that looks like. What advice would you give us in terms of determining what that should look like or what guardrails we should put it there?

I think we'd have to work with staff a little more to work through that concern. But I mean, generally the key control that the Legislature has is to enact requirements in the trailer legislation. So if there's more stakeholder process that you would like to see, you could enhance sort of the existing stakeholder consultation requirements. Create, for example, criteria over which stakeholders would be included in that. You could specify how many times they would have to be consulted. You could adjust the trailer legislation to sort of address some of those concerns. That would be, I think, the primary tool you have.

So on that note, maybe go back to Director Baass, taking a step back in terms of looking at the Medicare system right now. Do we know how much needs to be done to kind of create stability in the Medicare system when it comes to provider rates, reimbursement rates? Do we have kind of a sense right now or we just I think it's the $10.3 billion over the over the life of this plan, is that sufficient or for just the providers you've outlined?

I think one could argue that we need ten times that type of investment in the Medi-Cal space to get it to the place where our providers feel supported. Given what we have before you in terms of the size of the MCO and the 11.1 billion that we're talking about as part of this proposal, we want to be prepared with coming to you next year, next January. With a proposal that's thoughtful in terms of how to best direct those additional rate increases and what value we think we will be getting for those additional rate increases in terms of provider participation and access, for example.

And I guess that's the crux of the concerns at least I have, which is if you read the analysis, this MCO Tech structure is not permanent. So whether it is three and a half years, five years, ten years, there is a level of uncertainty. So you mentioned in your opening about sustainability once you raise the provider rate and there's a continuous appropriation that obligates the state moving forward. So how do you sustain that beyond the ten years or whatever amount of time is determined in this negotiation?

I think that's the balance that we're all trying to discuss between three years to ten years and where we can provide certainty to our providers. As for the longevity of the rate increases, I think that's part of the conversations that we're all having and kind of given kind of the state's fiscal situation as well. What is the balance between spending more immediately versus spreading it out over a longer period of time? And where do we think the impacts will be and how do providers feel about kind of the longevity of those rate increases?

But let's say what happens and you and I discussed this, but what happens in year eleven?

In year eleven. That will be a long time from now. I mean, I think we would imagine that many of those things will probably be kind of just built in on the natural and the rate. But that's a very future perspective in terms of the State's budget fiscal situation.

Sure, but you're asking the State to obligate ourselves this year for year eleven, right?

I think we think that the managed care tax will be sustainable at that point where we would be able to support 1.5 billion, for example, annual rate increases. We will be able to design an MCO that will sustain that past eleven years from now. But that is definitely the future. Lots of unknowns with regard to Federal regulations.

Because I stipulate that the concern here is trying to get a federal approval because of the and that there's built in uncertainty there. But as you kick this out, as the chair said, we're dealing with trying to restore cuts that were done ten years ago. So are we setting ourselves up for something that could happen in year eleven where that Legislature at that time is we're obligating that Legislature to ensure an ongoing amount of funding for something that is uncertain.

Yeah, I think what you're raising is a good point. I think that's why we kind of built things the way we did is I just want to emphasize what Director Baass mentioned. We will still have the ability to draw down an MCO tax in the future that can create general fund gain. It's hard for us to know exactly what that amount would be because we don't know where the federal government will go, which would help offset that long stand like that ongoing rate increase. But, I think that's where you have to really size up what portion are you going to put towards rate increases in the ongoing and that changes very much, as mentioned, from three years to ten years in regards to what you can afford in those out years. Additionally, over time, it will essentially get built into the base of the program and so it won't be as big of a cliff if you can ride that out over a little bit longer period of time. I think with three years, for example, there may be obviously a lot larger cliff if that were to be considered.

So let me ask the obvious question, which is why not take the revenue that's collected from the MCO tax and just use it for the life of the tax instead of trying, instead of spreading it out? Wouldn't we put more into the medical system and wouldn't that actually allow us to do more to help providers?

Alupa Montrequez with the Department of Finance so currently, as Ms. Baass mentioned, 8.3 billion over the life of the tax is to help sustain the Medi-Cal health program. Without that, the State would have to consider cuts in statewide cuts to balance out the budget.

Okay, this goes back to the question I asked the LAO. You're telling me that if we did not do an eight to ten-year span over this revenue, that there would be cuts in the budget because you're using it to balance the budget.

So the amount of the MCO that sustains the Medi-Cal program, also that stays within the program. So statutorily, the MCO tax is supposed to fund the Medi-Cal program. So while it does reduce the General Fund spend for Medi-Cal, those would be costs that would otherwise be borne by the General Fund.

So what programs would be cut if it was.

So right now it would be the 3.4 billion we would need to find reductions in the Medi-Cal program of that size. So the MCO helps maintain the Medi-Cal program. So no, we didn't make any reductions to the Medi-Cal program at the May revision.

Okay, so clarify this for me. If we take the amount of revenue that's generated by the MCO tax and instead of spreading out over ten years, we take that total amount and put it into the Medi-Cal system, how does that generate cuts in the Medi-Cal system?

Let me just clarify something. So there's two different pieces. There's the 8.3 billion, which is the offset. I think what you're hearing is that if we didn't make those investments within the 3/4ths year of the tax, we would have to have substantial cuts to the Medicaid program based on the current budget outlook, which could include cutting coverage, benefits, et cetera. So that portion of the dollars is meant to keep us whole. So we had to make no changes in this budget and in the next few years, the additional question is there's about $11.1 billion. That then goes to what's? The Special Reserve? That's what's funding the non federal share of the rate increases, and that's the portion that's going over eight. So the budget offset is through fiscal year 26-27, and that is equal to the 8.3 billion that's just keeping our budget whole. Given the outlook of the budget separate apart, there's $11.1 billion that would be able to be spent over that longer period of time. And that's what we're trying to decide how those dollars are spent and over what portion of time in order to not have a fiscal cliff. But if you did that within the three years of the tax, you could see a very sizable because that would essentially be a very large anywhere from four to five, depending on what number we land on. Billion dollars of rate increases that would not be sustainable at the end of.

The but after three and a half years, the state of California would ask for renewal of MCO tax.

Correct. And the reason why we are recommending not going that large one, this is the first time any state, for example, has asked for an MCO tax of this size. We don't know if that would be approvable in the future given the conversations that we've had with the Federal government. So we're trying to find a balance in regards to how do we make sure that there isn't a fiscal cliff in case we can't have an MCO tax of this size come 2027.

And this gets to the proportionality piece that we talked about earlier and the ability to tax our Medi-Calmanaged care plans at a higher rate than our commercial plans. And so we anticipate that federal regulation will change that. And so the size of the MCO, even if we would plan to renew in 2027, would likely not be as large if they change that Federal regulation.

Have you modeled that? I guess from that standpoint, you're telling me that if we dedicate the amount of revenue generated over three and a half years and spent it in the life of the tax, you're telling me that in year four there would be forced cuts into the Medicare system?

Not necessarily forced cuts, but additional revenue that would be needed to support the program. If we're not able to renew the MCO at the same level as what's being proposed today.

She said that there's going to be cuts. So that's what I'm trying to understand.

To clarify, my comments are related to the 8.3 billion that is assumed in the May Revision. If a shorter amount of time were to be decided to spend the additional MCO tax revenue, there would be general fund cost pressures in year four.

Maybe ask LAO, do you agree with that assessment?

Yeah. So again, there are two different issues. The general fund offset, I think that was explained. And then the second issue is on the reserve. If the reserve was spent over three to four years instead of eight to ten years, and you can see on page twelve there. But the sort of annual amount that's going to the reserve is about $3 billion or so. So if the MCO tax were renewed at that exact same size as the one that's being proposed now, there would be no fiscal cliff. We would continue to receive that same amount of revenue and these things would be sort of obviously supportable the issue here is if the tax comes in and the next tax is much lower, then that raises the question, how do you pay for this $3 billion in ongoing cost to medical? Presumably that would come from the General Fund. And as you've sort of heard from us before, we think the state is facing sort of fiscal constraints. And so that could put the legislature in a difficult sort of fiscal situation in the future. Stretching it out over eight to ten years, delays that fiscal cliff. To the extent that that's what the Legislature is facing. You raised kind of hit the nail on the head on what happens in year eleven. That's still a question that's before the Legislature. But that year eleven sort of shortfall would be much less than the sort of shortfall than if you were to sort of have $3 billion in ongoing cost of Medi-Cal.

Okay, well, I appreciate the conversation. I want to defer to my colleagues. I think, broadly speaking, I think that we should always be concerned of the rationale of using medical dollars in order to close budget deficits. That's probably not what was envisioned in the MCO tax. The very notion that you can now generate a lot of revenue this time and just try to maximize it for the budget certainly gives me pause. I think we need more transparency in the provider process or the stakeholder process determining how we increase rates in the future. As someone that does believe that we have to increase reimbursement rates, we need to know, I think, what that looks like before we start approving the revenue. And then in terms of the timeline, I would love to see the modeling to see if the idea that somehow if we put more money into the MediCal system at the outset because there's no shortage of needs in the medical space, I think that actually is something that warrants the conversation. And if that's going to create cost pressures in the future, that cost pressure is going to exist no matter what, whether it's three and a half years or as I indicated before, we're creating a cliff at year eleven. So we need to figure this out and what that structure looks like. So those are my concerns, and I know I'm very gracious to you, Director Baass, for the information and of course very appreciative to the chair for putting this hearing together.

We'll go back and forth here, but I did before, I forget, because I might. So just real quick, we can renew the tax after a certain amount of time, regardless of what we have in additional funds. Does not the federal government look at the fact that you might have saved put some of this money aside and say we're not going to approve it because you've set this aside for out years?

No, in fact, we've had specific conversations with the Federal government about using this as a strategy for increasing rates, which they are very favorable of. And we were fully disclosed the idea of putting it in a special fund to pay for rates in the out years. And so they were very supportive of our proposal.

And then the final piece of this, and then I won't ask any more questions of this panel, is that as Mr. Fong was pointing out, we got this set aside and then you're going to do some actuarials and try to figure out how to do that. I guess I go back to the original. I still feel like we have an opportunity and we should be doing some targeted investments like, for example, small and rural hospitals that are in potential trouble here. What good does it do to increase provider rates if you ultimately don't have the hospital for obstetrics or others? Essentially what you're saying is what I understand is, well, we're going to spend this money now, but we're going to wait a year, year and a half before you said this. We figure out how we're going to spend the rest of it. I think we can walk and chew gum at the same time, I think we can make some targeted investments to help, in addition to provider rates, the stability of some of the smaller hospitals that might be on the edge because of seismic, other pressures, whatever.

May I follow up on that question? Can I ask just on that note, is the option to put some of this revenue into the distressed loan program for hospitals? Is that something worth the Administration is worth considering?

I will say it's been raised multiple times by different members of the legislature. Yes.

Okay. Thank you, Dr. Weber. And we're going to go back and forth here.

Good morning and thank you to both chairs for putting this on. And thank you to the panelists. This has definitely been very informative. I'll keep my comments short. First, thank you for all of the work that you've done. Thank you for including primary care, maternity care, and behavioral health in this initial round of provider increases. However kind of piggybacking on what Chair Wood said, I do think that this is an unprecedented opportunity. All providers within the healthcare space were hurt tremendously by the cuts before and by only focusing on a certain small subset to try to make them whole, I think limits what we can do and how we look at health care as a whole. So you can have a pediatrician who has a child that has seizures and they need to see a pediatric neurologist, but if we have not gone into that specialty to make that group whole, that will limit access for that patient and that family. And at the end of the day, we will not have been improving the health care of all Californians. And so, as you are grappling with this, I just urge you to recognize that we all work together within the healthcare space. Whether we're primary care providers, whether we're specialty care, whether we are ambulance drivers, or just techs that work in the hospital. If we're all not made whole, then there's still significant gaps. And we're still not doing the best that we can for our California residents. The second thing I want to point out, which has been pointed out, is we all know that there is currently a crisis within our healthcare space. We have a shortage of providers. We've got hospitals closing, our Ers are slammed, our hospitals are overburdened. And yet at the same time, we are expanding Medi-Cal for all. And I want us to really think about that because we're expanding who has coverage in a time when there's crisis and we have a pot of money and we've decided that we're not going to completely use all those funds right now. So I actually kind of echo what Assembly Member Wood kind of opened with was the fact that we need to really be looking at using those funds now and not trying to sparse them out over an 8-10 year. Period because we can do so much more now as far as bringing in more providers, increasing access in this space where we're already in a significant deficit versus kind of giving you a little bit and hoping that we're going to have an improvement in outcome because we won't. And the other thing that Assembly Member Fong kind of touched on and I was actually questioning is how this is supposedly going to improve the budget deficit. And I just want to echo that whatever funds that we generate from the MCO tax that should be used within the healthcare space, not used to offset another part of our budget because we already have significant issues of funding within the healthcare space. So as we're figuring all of this out, I don't want any of these funds to be used over in another area. If we have more in health care, then we need to spend more within healthcare. So thank you.

Thank you, Dr. Jackson.

Thank you very much. Mr. Chair. A couple of things. I do believe ten years is definitely a stretch. I don't believe in passing the buck on for someone else to solve. Quite frankly, if we have the ability to solve it now, then we need to begin to do the heavy work to be able to do so. So I am not in favor of waiting, spreading it out for as much as ten years. I'm sure there's a sweet spot in between there that we got to figure out. But I think ten years is just at least a no go for me. I also think that at the end of the day, I guess the best question is when should we be hearing from CMS in terms of what the future of their restructuring is going to be?

So I can't speak to that. I would say that this current Administration has been dropping a number of Federal regulations. In the fall of last year, we had a new full Medicaid eligibility rule drop. Last month we had a access rule and a managed care rule drop with substantial changes for the Medicaid program in the out years. And they have just signaled to us this is on their list of federal regulations that they are exploring. I do not know the time in which they will drop those regs. We do have to see those regs, proposed regs. Of course we would comment on them, but typically what we've been told is anytime, once it drops, it's 18 to 24 months from drop to full closure and in Federal regulations. And so that is why we propose the tax the way we did, because we know we have a few years here to better understand that impact.

So it could happen between now and three years?

That is correct.

Okay. Secondly, obviously there's a number of crises we have to solve within our Medi-Cal structure. Right. Making sure that we have funds available for hospitals to make sure that they're more stable, particularly in our rural areas and other hospitals that might actually have some additional concerns down the road. Obviously, I want to make sure that we continue our discussions and making sure that if we have an ability to solve the billing issue with behavioral health, I would certainly want to make sure that that's a part of our discussions as well so that we can make sure that we're solving that issue. Also, my next question is more of a technical question. You always mentioned non specialty mental health. Can you define that for me? What are we talking about?

Sure. Those are services provided by our Medi-Cal managed care plans. So those are generally considered like the more mild to moderate services that are provided by our medical managed care plans in comparison to the specialty mental health services which are provided by our county behavioral health plans.

Can you give me examples of such services?

Sure. I would say just depression screening. Mild to moderate depression services would be on the managed care side and then kind of anything more severe would be on the county side. Psychology is generally more on the Medi-Cal managed care side. Yeah.

So any medication management, group therapy, individual therapy, all of that would be non specialty, higher level crisis intervention, residential services inpatient psychiatric, that's on the specialty mental health.

Oh, fantastic. That's very helpful. When we think about having this opportunity, obviously there's no doubt that consistency and predictability is critical in what we're trying to accomplish here. How quick do you anticipate being able to bring folks in the room to begin to work through all the other things out? You say stakeholder groups. How quick do you plan on doing that and how much of their input is really going to be weighted in these discussions?

I think we're supposed to get more information from our actuaries in midsummer. So I think that is the first piece we need to kind of have an understanding for what the data is telling us. And so I think after that late summer in the fall, that's when probably some of the stakeholder discussions would would begin.

I agree and I greatly apologize, but I have to catch a plane at 1215, so I've probably extended as far as I possibly can and so I have team members that can also weigh in if needed. So I just wanted to say that before I walk away from the panel.

No problem.

Thank you Ms. Cooper.

Safe travels. And lastly, obviously our Medicare or our Medi-Cal system or health system is in survival mode based upon this proposal. Will they still be in survival mode or will they be out of survival mode?

I think this is a step in getting out of survival mode. I mean, this is the first time the administration ever is using MCO dollars to do rate increases, to actually invest and augment the Medi-Cal program. It is kind of to some of the opening remarks, unprecedented in terms of how MCO dollars are being used. So I think it is acknowledgment that we need to build up the foundation, we need to better support our providers, we want to increase access to provider participation and thereby increase our members experience and our members ability to get the services they need.

So basically, even if we go along with this plan, we're still facing a system that's not healthy, a health system. That's not healthy.

With COVID there's been tremendous challenges just thinking about workforce in particular, right? And so the entire system this is a step in addressing some of the concerns that we're hearing, some of the challenges that are being faced, but clearly there's more to do. And it's not just that the Department of Healthcare Services is multiple departments that are really touching the healthcare delivery system and so how do we comprehensively continue to meet those challenges?

Thank you. Looking forward to continued discussions.

Thank you. I'll bring it back to the chair now and do appreciate all the comments from our colleagues. I'll begin with the Lao, as I believe it's important for us to acknowledge the state's fiscal condition that we're in now. There's been new information that you provided earlier today that wasn't in the original presentation through sub One regarding the multi year fiscal outlook going forward and want you to couch that in the comments that we just heard from. Director Boss regarding the MCO and the fact that previous versions have been general fund backfills essentially that they've never been used to augment the medical rates and that this is a significant advancement from the administration regarding the MCO proposal to address those medical rates. But want you to begin, if you can, by giving us that fiscal outlook and helping to ground us as we are making decisions today.

Just reviewing our outlook as you were as you were asking the question. So our office recently released our outlook. It was available, I believe, last week, so it was after we had had our sort of subcommittee discussion. So under Our outlook, we project revenues at least in the budget year to be less than what the administration projects. We also project some higher spending levels, particularly in the out years. And because our outlook reflects that we are projecting budget shortfalls for the state in the multi-year, starting at about $5 billion in the budget year, but then ranging more in the range of $15 to $20 billion in the sort of out years. I will say we do differ from the Administration. The Administration does estimate a balanced budget in the budget year, but under the Administration own multi-year, there also are deficits too. So we're in line with the Administration, at least in terms of estimating out-year deficits. I also want to emphasize that just to bring it back to that point, that this is a period of fiscal constraint. This is also coming when you're facing a very large MCO tax, sort of bringing in a sort of unprecedented fiscal opportunity. And so these are some of the issues you are sort of grappling with. Again, it is important to think about what decisions are made and how would that sort of put or not put budget pressure on the general fund in the future. That's why when you're thinking about augmentations, helpful to think about how are these costs estimated, are they reasonable? Is there risk that they would come in higher? Would that put it unforeseen impact to the general fund? It is also important to think about, to the extent things are ongoing, what happens at the end of this MCO tax. And that's why a lot of this discussion has focused on sort of gauging that potential fiscal cliff. So hopefully that answers your question.

It does. As we're trying to right size this. It's also helpful to remember that we're approximately three times the amount of the previous MCO tax and that we're appropriating approximately, again, 60% of those revenues towards Medi-Cal rates. But what we've heard consistently both on this dias and in last Senate hearing, I do my homework and listen, was a request to shorten the time period. And I do believe it will be important for us to be impactful and directed and so look forward to the opportunity to reach a compromise here with the administration on what that shorter time period looks like. Seems logical for us to look towards at least a minimum of five years for us to both create that sustainability while also focusing those dollars. I'd like to follow up as you've highlighted three areas of investment but highlighted two others that you would look to begin in 2025 regarding specialty care and acute care. Would also like to elevate in that spirit of compromise. If we can come to an agreement and look at what those out year spendings are, whether we could begin those as early as January 1st of 2024 as a mechanism for us to make sure that we're investing into areas that we know that's without prejudice to the stakeholders who will follow and all the needs to invest into pediatric day health care centers or emergency medicine transport or air ambulances or hearing aids for children or any number of them that will come forward. I think it is important for us to focus and be a thought partner with you and want to make sure we're involved within those discussions. Would like to follow up regarding the continuous appropriation that was described. I want to give the administration an opportunity to explain why that continuous appropriation is needed and whether or not, if there's a rationale for why you feel you need that authority.

With the Department of Finance. So one of the components of a continuous appropriation specifically for Medi-Cal is that we're on a cash basis. So it does help expedite getting payments out the door. The other point I would like to make is that the draft language does say that for the future rate increases in 2025 that would be subject to the annual budget process. So we would be coming during Governor's Budget and may revision with those proposals to discuss with the legislature.

Also wanted to follow up were there any lessons learned from Prop 56 and the supplemental payments regarding the complexity of getting those payments out. Your statement was that using base medical would be more efficient and so I wanted to give you the Administration an opportunity to explain that.

Thank you. So the way Prop 56 supplemental payments were structured, there is a reconciliation process between providers and plans and so often those supplemental payments are often delayed. We also have a two year reconciliation process between the state and our plans with regards to those dollars and sometimes those are clawed back because they were not provided to our providers. So really the goal with including these as part of base is really to simplify both from the state, the plan and provider perspective and really just to have this kind of guaranteed here is your rate, including all of the components as part of your base.

And by simplify you also mean we're able to get these rates out sooner.

And it's part of their regular payment, it's not an extra payment or something that they need to submit additional information for to get so really trying to streamline the dollars going directly to the providers.

Finally, I just want to make sure we've made the point. It seemed that there was consternation that these funds would go back to the general fund, but historically these funds have not previously gone towards increasing medical rates. And so what we're being proposed to today is a significant advancement and a movement forward from the administration. Just want to make sure we all leave with that same understanding today, as I believe the proposal that we're hearing is looking to provide resources to augment the Medi-Cal program that's never been done before. Just want to make sure that you agree.

I 100% agree. The MCO has never been used this way before, really over 60 or 60% or so, really going towards rate increases or investments in the Medi-Cal program that are kind of above and beyond what is today.

And just wanted to reiterate too that what's new here would be the Medi-Cal augmentations the use of the MCO, taxes, support, sort of Medi-Cal's existing budget that has been sort of the way it's been used historically. So that that is the historical use. What would be new would be using it to expand Medi-Cal services.

Final comment if I can, I would agree with the need for us to make sure that these are sustainable over a long time. But as we have championed access, I also believe it's important for us to get towards universal health care so that we can find cost savings within our system long term as well. I'm grateful for the administration for continuing with the vision towards a California for all, but believe that we're going to need to use all the tools that we have accessible to provide that quality care we so desire. And thus I'm grateful to the administration for the proposal and look forward to how we right size it, how we make sure that the time limit and the amount that we're putting in is appropriately effectuating the change we all want to see within the system. With that, I will thank very much this panel and we will move on to our Stakeholder panel next.

Yes, thank you. Thank you very much. Really appreciate that. Our next panel is two panels we have coming up. This is the first one. Stakeholder perspectives. This is a little like speed dating and we have seven panelists. We're asking for a minute or two each. So Linnae Koopman's, chief executive officer of the local health plans of California charles Bocce, president and CEO of California Association of Health Plans dustin Corcoran, CEO of California Medical Association catherine Scott, senior vice president, state Relations and advocacy. For the California Hospital Association francisco Lopez, president and CEO, California Primary Care Association jody Hicks, CEO, Planned Parenthood of California, and Matt Lijay, Government of Relations for SCIU California. So ready, set, go.

There we go. Speed dating. Okay. Good morning, Chair and committee members. Linnea Koopmans, CEO for the Local Health Plans of California. LHPC represents the 16 local community-based medical managed care plans that collectively serve over 70% of medical managed care beneficiaries statewide. LHPC is a member of the Coalition to Protect Access to Care, which includes each of the groups participating on this panel. The Coalition, which initially formed in Los Angeles through the leadership of LA Care, has joined together to advocate for the renewal of an MCO tax that will maximize federal funding and to reinvest that funding back into the medical program. The tax represents a historic opportunity to make significant investments in the Medi-Cal safety-net and to provide true access to care to the one in three Californians that rely on medical. Because the local plans serve over 9.3 million medical managed care enrollees in 36 counties across the state, we have unique insight into the challenges faced by our system. All of the local plans partner with the providers in the community and all experience similar challenges and barriers in getting sufficient providers into their networks. The clinics, who in some cases comprise more than 50% of local plans primary care networks, are struggling to recruit and retain providers to serve the significant volume of Medi-Cal patients who have a clinic as their Medi-Cal home. In other areas of the state, plans primary care networks heavily rely on independent physicians or small group practices. In many cases, these providers are only able to serve a limited number of medical beneficiaries due to the low medical reimbursement rates. Access to specialty care is a problem felt across the state for nearly all of the core medical specialist provider types, and we also understand the strain that some of our hospital partners are facing today. I'll close by saying we appreciate the work the Administration has done to put forward the MCO tax, including proposing that a substantial portion of those dollars be dedicated to the medical program. We know where the needs are in our system and therefore where significant investments are needed to drive access, quality and equity. We look forward to continuing to work with the Legislature and Administration in the coming weeks, and I'm happy to answer any questions at the appropriate time. Thank you.

Thank you very much. Mr. Corcoran.

Charles Bacchi with the California Association of Health Plans. We mixed up our seating.

Yes, you have, and I'm easily confused, so my apologies.

No problem. Charles Bacchi, the president and CEO of the California Association of Health Plans. We represent 43 of the health plans here in California, including those that provide medical in the public space as well as commercial plans. We'd like to thank the Administration for their budget proposal, which, as noted, does indeed, for the first time set aside some funding for the medical program from the MCO tax, and we appreciate working with them over the past few months on the mechanics of the tax itself. As stated, our members are the ones who do pay the tax, and while the public plans are reimbursed, the commercial plans are paying the tax upfront. And that means that our customers are paying for it. That means people who buy their own coverage through Covered California or buy coverage through their employer are the ones who ultimately pay the commercial portion of this tax. And that's why it's so important to have an industry-supported tax like this be well thought out and to be well directed. We have historically, as an industry supported a tax on ourselves and it hasn't really paid off. This time around is a great opportunity for this Committee and the Legislature to actually make the MCO tax do what it's supposed to do, which is support the Medi-Cal program. Our ways of looking at whether a tax is supportable, we have three key components. The first is that the tax must directly improve the medical program. From our perspective, as Ms. Koopman stated, from the health plan perspective, looking at the entire network in the medical program, the biggest bang for our buck we believe, are in the primary and specialty care areas. That's to get people the care they need before they end up in emergency rooms. That's why it's one and two for us. However, we also support the coalition that we're sitting with here today, which has come up with a much broader list of services and we think they all are also supportable for the program. So that's first. The second is a tax has to be affordable for our customers and purchasers. So again, it can't be so expensive that it's making it difficult for people to buy health care coverage. And then secondly, any associated policies that are passed along with this tax should also not make health care more affordable, I mean, more expensive for our enrollees. So that's something that we'll be looking at as we get across the finish line. Third, the tax has to be predictable, stable and as equitable as possible. In order for us to handle a tax like this, we have to know what it is in advance. And I think the lack of clarity around federal approval always is a challenge for us. So again, we're pleased to be here as part of this coalition supporting what we think is a very well prioritized list of funding augmentations to the Medi-Cal program. We look forward to working with the Administration and the legislature in the coming days and weeks as you guys bring this across the finish line, willing to answer any questions. Thank you very much.

Thank you very much. Now, Mr. Corcoran.

Thank you, Mr. Chairs, members, it's a pleasure to be here and a particular pleasure to follow Mr. Bacchi in testimony. He and I haven't had much opportunity to do that, to find something that we agree upon. But here we are agreeing on this critical issue and we came together to focus on really two key areas and that's access to care and equity in care. In California, what the Pandemic laid patently bare here in the state was that those on medical suffered disproportionately, disproportionately in terms of hospitalization, disproportionately in terms of death. Their ability to be able to get vaccine, their ability to be able to get primary care was highly differentiated from those in commercial coverage. And this coalition came together out of those principles. Those principles were clear, made clear. Unfortunately, in the Pandemic but they were clear before that to those of us in the healthcare system. So thinking about access and equity and this MCO tax, this is fundamentally, in my view, a generational opportunity to make significant investments in primary care, in specialty care, behavioral and mental health, reproductive care, graduate medical education. So we can increase the number of physicians in the state of California, the workforce that provides so many of the key services in the entirety of our state. This is a generational opportunity to fundamentally change those access and equity questions in Medi-Cal. What we hope in the California Medical Association, from our perspective, is that a medical enrollee has the same access to care as somebody in commercial insurance, that a provider in their community can treat the community as it presents itself. If you're in a community with 40, 50, 60, even 70% of medical, and you're a physician, you should be able to see 60, 70% of your patient load in Medi-Cal and not have to make a decision about whether to keep your doors open or not. And that, unfortunately, is a decision that too many providers have to make right now. We appreciate working with the Administration. We think significant advancements have been made. If you go back to December, there was no MCO tax. Now we're contemplating in the January budget a small traditional MCO tax, as Chair pointed out. And now we're talking about a much larger one with more significant opportunities for investment. We do think an accelerated time frame is important and is key here. We don't think a ten-year time frame is going to move the needle on access or equity. We have systematically underfunded medical for generations. This is an opportunity to right a bit of that wrong. We will continue to work with the Legislature. We appreciate this hearing. We appreciate the opportunity for the administration to consider that larger MCO tax and an accelerated time frame time frame, as discussed here. And we hope that we're able to achieve that generational opportunity to address access and equity. Thank you for your time. Happy to answer any questions. Great, thank you.

And I'm not sure if that's the microphone that's working. Maybe you think we're good. I know that the one next to well, it works in here, but it's not working. It wasn't working on the Internet. No, I don't know which one. I think it was that one that.

I can move over.

Perfect. Thank you.

Good almost afternoon. Kathryn Scott representing the California Hospital Association. Our California hospitals do serve 15 million Californians who rely on medical. Unfortunately, as many of you have heard, due to unprecedented cost growth since the pandemic, our access to hospital services is in danger in many of the communities serving those in the medical population. We appreciate the Governor's proposal to move the MCO tax and focus it on Medi-Cal patients like my colleagues. However, we do not agree that it should be done over eight to ten years that we need that immediately influx of cash to help support those providers at this table and in those communities specifically for hospitals. Focusing on sustaining rates in those underserved communities is critical, as many of you have heard, and as we face yet another bankruptcy in a community down south, we also agree with our medical excuse me, our CMA colleagues, that GME is important. Our CMA colleagues also, again, sitting at the table together, that supporting our GME and workforce is critical. We're about 20% down in workforce, feeling that every day, particularly in our emergency rooms, as we try and move patients both up into the hospital or out into other environments in the community that are also lacking workforce. And then finally, while we have historically and continue to support community services for behavioral health patients, we also support those in inpatient care and need to address those in a systematic way and support inpatient mental health services as we move forward alongside our colleagues. Frankly, this is a generational opportunity we have and do appreciate the administration's focus in moving those MCO dollars into the medical managed care system, but frankly, we need to do it sooner than the eight to ten years and look forward to working with all of you as we make that happen in the next few weeks.

Thank you, Mr. Silva.

And I may ask that we create some space. We have one extra panelist who currently doesn't have a seat. Want to make sure our brothers and sisters from labor are able to.

Good morning. Thank you, Mr. Chair and members of the committee. My name is Francisco Silva. I am the CEO and president of the California Primary Care Association. Community health centers are your FQHCs, your Rural Health Center, your free clinic, your migrant health center, your neighborhood Community Health Center that's focused in the community. This issue is critical to us because Medi-Cal is us. We serve one in three Medi-Cal patients, one in five Californians, over a million uninsured. So it's critical that we invest in Medi-Cal. We joined a coalition urging the supplemental and immediate investment of the MCO revenues because we understand from a firsthand perspective what it means to invest in the safety net and how critical that funding is. Since the passage of the ACA, California has taken bold steps to provide expanded coverage, to look at equity, to look at social determinants of health. However, we all know, like Dr. Weber indicated, coverage doesn't mean access. And with this expanded access has come a broader responsibility to ensure timely access to medical, dental and behavioral health for our patients. We must look at this investment from a patient perspective and ensure that we invest in the backbone of the healthcare system. This will require not only increasing Medi-Cal rates and that's important to broaden access, but also investing in hospitals and health centers and physician groups, and, of course, our workforce who are currently holding it all together with this massive, bold, and necessary steps that we've taken as a state. Unfortunately, with the expansion and without additional funding, it's met increased costs. It's another way to look at it. For health centers alone, that's been a 2020 7% decline in investment. And that investment should mean more patient access, more timely access, and providing more resources to our historically underfunded healthcare system. I started my Medi-Cal journey at CMA Litigating over Medi-Cal cuts about 17-18 years ago. So it is a pleasure to be here and looking at the opportunity to invest back, build back the cuts that we've made to the system and add to it. So I pleased to be here, pleased with the start of the down payment of expanding in medical. Happy to take any questions. Thank you.

Thank you, Ms. Hicks.

Thank you. Jodi Hicks, President and CEO of Planned Parenthood Affiliates of California. And we represent seven affiliates and serve about 1.3 million patient visits annually. With over 100 health centers throughout California. And somewhere around 90% of our patient base depends on medical programs throughout the state. Majority of our patients are young, have low incomes, belong to underrepresented or underserved communities, and for many patients, sexual and reproductive healthcare clinics are the first and only source of care. And I want to say what's unique about this coalition that we've been meeting once or twice a week for many weeks now is not just that we're not sitting here fighting with each other like we do on other proposals, but also that we're not giving you individual spending plans. We really work together as a coalition because we are all part of one system that depends on each other for the patients that we care so deeply about and the patients that we serve and really had access to healthcare as our North Star. So not backfilling what each of us might need based on what's happened in the past, but really looking at what is the best way to provide more access to care. And I've listened to this Committee and by the way, do want to also thank the Administration and these Committees for having an opportunity to have this conversation, but listening to what is uncertainty in the budget process or uncertainty in the future. And certainly we understand that as providers really well, especially in the last couple of years, we're coming out of a pandemic for Planned Parenthood. As you know, we have a post-Dobbs landscape that changes week to week. We have court decisions happening where things like medication, abortion are on the table. And we've had to adjust to that. And quite frankly, if we had been more cautious because of that changing landscape, we would be closing many of our health centers. We haven't. We've invested. We've tried to be more creative and meet the needs of the community. We've done things throughout the last couple of years, like in rural communities, invested in more telehealth in certain communities in our urban populations. We've started Black Women's Health initiatives. We've hired patient navigators, more Promatoras to try and go out in the community and meet those needs. And when there's uncertainty whether that's economic a pandemic court cases, we know that the need actually becomes greater. And we have an opportunity right now to be bold, to invest and serve those communities. And I appreciate this legislature that has increased coverage because it was a moral imperative for people that need health care. But it's a moral obligation now when we have an opportunity to invest, to really ensure that we can meet those needs and we've done that with this coalition, whether it's workforce, community health workers, all of the needs that we saw together and really just implore this committee to hear what we know on the ground, how we can best serve patients during this time and not just throw around equity, but really ensure that patients have equity when they're seeking health care. So thank you.

Thank you. Mr. Lege. We think the other microphone is working, so we didn't know that when we passed. Ms. Scott okay, all right, perfect. Well, we hope so. We'll find out in a minute.

Thank you both to the chair and my panelists for making room for us on here. Matt Lash on behalf of SEIU, California. Our 700,000 workers, many of them are healthcare workers and many of them are families that are on medical. And so we see this as an urgent and important investment in the medical system to ensure we can fulfill this promise of health for all. Our workforce crisis existed before the pandemic. We had a shortage of 500,000 healthcare workers in California. To be able to just meet our needs of our aging population, now, after three plus years of the horror of the pandemic, where one in five healthcare workers are quitting, one in three are considering leaving the profession, we see this as an opportunity to try to address that workforce crisis and that workforce need. The healthcare workforce, particularly as we're looking at the support workers in the workforce are primarily women and people of color. And unfortunately, many of them are stuck in low paid jobs without opportunities for advancement. And we see this as an opportunity to invest in that workforce, to allow people to advance in their career and meet our care needs in California. But we must take bold action to do so. And we believe that urgent investment will lead that way. Ensuring that workers have a voice in the workplace and voice in this process, ensure that we have standards in this process is critical because we know if we can get the rates that are going to go to our provider partners on this coalition, we have to ensure that it also trickles up to workers. And once we do that, we know that we're going to improve worker retention, increase productivity and improve quality of care. And so some real critical investments that we can make to try to ensure that access to care is fulfilled and that we're relying on quality care. I do want to also just highlight the hospitals pointed out in particular our public hospitals who provide 25% of all emergency care and the real need to make investments there because they do have long-term funding deficits and needs and believe this coalition has put forth proposal to help with that. Also to expand on our provider shortages. Both that CHA and also CMA colleagues brought up is the investment in graduate medical education. If we can train physicians in California, 72% of them are going to stay in California. So it's an incredible investment we can make to address our long term provider shortage. Finally just want to make sure that on the workforce side, we're creating opportunities for workers to have a voice in those training programs, advance in their career and create programs that's going to meet the industry needs and so see this as a really important investment. And I'll just finally close by just really highlighting the work that this Committee has done both on Subcommittee and Policy Committee to ensure that we are expanding access to care to everyone. Coverage is an amazing thing, but that has to result in care. And so we really do see this as that opportunity to make that investment and appreciate your time and happy to stay for any questions that folks have.

I'm just going to first of all, thank the panel here and then just are there any questions? We do have one more panel left. Okay. Dr. Jackson?

Mr. Silva. Obviously, I've been rather aggressive on the need of switching to san day billing when it comes to our behavioral health services. Some of the pushback that we hear is that the current rates should be sufficient enough to be able to take care of those needs while they are there. Can you tell me what the inefficiency is or why the current system is not working and why there is actually a need for same day billing?

Thank you for the question. Same day billing issue, just for background, that's a challenge for health centers is for california is one of four states in the whole country that doesn't allow health centers to bill for two visits, a medical visit and a behavioral health visit. And that's become a significant challenge, particularly for those patients that travel long distances. Asking them to come back for a different visit becomes a problem. And particularly somebody who's suffering with the mental health crisis, not being able to see them at the time is critical. Many health centers have responded by just eating the cost. That means providing for that workforce, for that Behavioral Health Specialist to be able to do it at that time. And for some health centers, theycan't. If you're on the margin, particularly for our health centers that may be in rural frontier areas, you just can't do both. Telemedicine has helped to provide some accessibility since the pandemic, but it's still an extreme challenge. The ability to be able to do that and provide care in that comprehensive manner is critical in long overdue. Frankly, it's one of those unfunded mandates that we've had in Medi-Cal for a very long time.

Thank you. Thank you. Anyone else? Dr. Arambula? And Mr Fong

I'll ask the question of Kat Scott, if I can, so I'm going to try and again. Perfect. There was a report that came out last week. I'm sorry to catch you in real time, but as we're negotiating, I think it's important for us to have information before us. The California Healthcare Foundation put out a heading for an acute crisis. Within it, they studied 348 acute care hospitals and found that total hospital volumes been rebounding and reached pre pandemic levels, quarter two of 2021, and now exceeds 2019 levels by 6%. But what struck me in this analysis was that they notably found that the lowest margins were not necessarily more dependent on Medi-Cal or Medicare volume than the average California hospital. That I'm hoping you can comment on why that is the case within the bottom quintile. They are continuing to have hospitals with over 50% of their payer mix, which are private, are struggling. That I'm wanting to hear from you why that was found in 80% of our hospital beds across the state.

Sorry. A couple of things and we're still analyzing that report. So our data analyst actually showed that the last quarter and I actually have it here the last quarter or that bottom quartile actually does depend on medical that our last quartile that are in the red. So those margins are in the red have a higher number of and I'm pulling it out here, so I apologize. But in the meantime, you were asking about the rebound.

I'll point to within the report on page nine, the average hospital has a payer mix of 40% medicare, 32% Medi-Cal. But the sample of low margin hospitals, that bottom, bottom quintile was 42% medicare, 31% medical, and 20% of those lowest margins had a private payer mix, again of over 50%. But I'm trying to really make sure we're asking and answering the tough questions regarding rates and hospital success to make sure that we're providing the resources to where we believe they will be most impactful to effectuate the change that we need to see within the medical system.

Yeah, and I apologize, I'm just looking for our analysts looked at put my glasses on, she has concerns. So our analyst has concerns with the sample because when we look at the inpatient discharges, when you adjust for outpatient days, he uses the average payer mix. When we use the two thirds of hospitals in the 25th 25th percentile quartile of lowest margins have a government payer mix above the state average. So I think we look at sort of an adjusted day versus he may have looked out or sampled the volume. So I think we can get back to you on that. I think we have some disagreement. There's general agreement in the report on back to the volume, we do see an average length of stay that is longer for myriad of reasons, including the acuity of patients gone up since COVID as well as we're having a hard time discharging patients. So oftentimes we can't find a SNF to discharge to skilled nursing facility excuse me, or an inpatient bed or a community program that's sufficient to support whether it's respite care or whatnot. So we are seeing the average length of stay go up. So we are seeing those volumes go up. Doesn't necessarily mean our revenue is going up because oftentimes we've negotiated based on an average length of stay versus that longer length of stay. But we'll get back to you on that quartile. I think we look at it differently when it comes to our Medi-Cal hospitals and those DSH hospitals because we see those lower quartile in higher averages of red.

I hope we're able to speak apples to apples. Many of us look towards the Healthcare Foundation as a truth sayer to what we're facing as a system and want to make sure that if rates are affecting our hospital's financial success that we're aware of it. And absolutely, that conclusion that came out in the report last week is flying contrary to much of the narrative we've heard in the last year that I'd like to make sure, as we're looking at this time of generational investment, that we're focusing it on areas where we can be most effective.

Absolutely. We'll get back to you on that differential in those in the red.

Thank you, Mr. Fong.

Thank you, Mr. Chair. I just have one question, and anyone on the panel can address this, since you guys are speaking one voice. But in terms of the stakeholder process, that was a conversation in the first panel. Seeing that, how the process is laid out in the proposal, what guidance, what advice would you have in terms of fleshing out more transparency in the stakeholder process? What input would you want? And as Dr. Weber mentioned, certainly we want more resources in a shorter period of time. So I guess in terms of fleshing out this proposal, what improvements would you make?

Maybe I'll start Linnea Koopmans with LHPC. I think, broadly speaking, one of our messages has been is that we know where the gaps and needs are in our system. And I think this is well documented and well known. You can look at the network certification in medical. You can look at other studies done by CHCF or others that look at kind of the differential and access. So I think one of our asks is to, based on those known gaps, make commitments now, not discounting kind of the important details and mechanics that would need to be fleshed out. Certainly, our medical financing is complex, but I think the kind of messages, each of those of us that are a part of the coalition, are a core part of that delivery system. And we see and feel the gaps on the ground every day.

And I would just add that that is part of us looking at the ecosystem and considering all parts of it. But I do think that the gaps are well known. What has been interesting in the course of the conversations, both within the coalition and with the department itself, is considering all our different vantage points. So the plans have a very interesting and distinct set of data, as does the department. How do the provider organizations we ended up generating a lot of that during the pandemic and looking at some of the compositions and concentration of medical lives in a particular community relative to the proportion of providers. All of that provides a really interesting set of data points to build off of. Where do you make your investments and which CPT codes and which specialties do you make those investments? Do you have added investments that you make based on HPI and some of the other things the department indicated here earlier, which I think are very interesting and critical possibilities. So I appreciate the question. I think some of that dialogue is already going on now. But we're trying to move very quickly and very rapidly to address those shortages because I think the sooner we make those investments, the better. As the chair indicated earlier, the longer we wait, the more we're just continuing to double down on a broken system. So I think they're well known we don't have enough here to consider fixing everything that's wrong in Medicount. I think we need to acknowledge that up front. And we had to acknowledge it as a coalition, too. We had to all come to the table and understand that we all have things that we can point to that are significant pain points for patients and for the providers that take care of them. But knowing full well that even if we took all of the MCO money, we wouldn't be able to address all of those things. So where do we prioritize? Where do we get the most ROI and the greatest bang for our buck? Knowing that if we just took a peanut butter approach and we just spread it out over the continuum in an equal portion, it would just be lost and we wouldn't have a net effect. We had to deal with that in Prop 56. Prop 56 dealt with a handful of codes, mostly ENM evaluation management codes, non-ER based evaluation management codes, because we felt that was the biggest gap. The department's looking to bring those up. There was a question earlier that Dr. Wood brought up. What level would it need to get to for some of these services to be able to function and operate? What we know is we have some that are way below and some that are less below, but still below that necessary sustainable level for provider to be able to provide that care. So I think that's the data point we want to look at. That's the engagement between the provider community, between the payer community, and between the department itself that needs to occur to make those significant and important investments.

We've got a panel so quickly, if you don't mind.

Thank you. I'll just add something very brief, is to always keep an eye on the patient and make that our North Star, as we have to make tough decisions, like Dustin indicated. How does it impact the patient and patient's ability to actually get the care, make sure that's part of the stakeholder process?

Thank you. Thank you. And I don't have a question, but just a comment. And that's just I think it was no accident that there were four people up here who come from provider backgrounds. And so please do not misinterpret our intentions. It is about making sure we get the best bang for our buck, for all of the patients out there. That's really why we are interacting at this level and want to continue to do so. So I want to thank you and bring up the next panel. I would just say that ideally, we would have had all of you up here, but as you can see, there aren't enough chairs. And so I apologize for that, but please come on up and turn this over to Dr. Arambula.

We will begin with Peter Kellison, who is an advocate with the Pediatric Day Healthcare Coalition, followed by Lisa Epps, president of the California Association of Air Medical Services, then Lydia Misalides, Executive Director of the California Association of Adult. Day Services. Steve Horne, president of the California Medical Transportation Authority and then Dean Chalios, president and CEO of the California Association of Health Services. At home. We'll begin with Mr. Kellison.

Thank you, Mr. Chair and members. Peter Kellison. I am an advocate, and I represent a coalition of 22 Pediatric Day health care and respite centers in the state. An essential lifeline for medically fragile children. These remarkable children suffer from acute or chronic health conditions that require skilled nursing care throughout the day. Here are the children they serve, those battling HIV disease or struggling with severe lung disease, requiring oxygen or ventilators spina bifida, heart disease, malignancy cystic fibrosis, and other complex medical conditions. I know many of you are familiar with these facilities and appreciate your attention throughout. While many of these children are unable to speak, they possess the incredible ability to communicate in their own unique ways. These centers and their families they serve are fighting desperately to prevent the imminent closure of these facilities. And here's why. They face a multitude of challenges that threaten their very existence, such as the impact of the COVID virus, soaring costs, and severe workforce shortages. And yet they must maintain minimum staffing requirements. They cannot retain staff, and they must maintain staffing requirements. They are trapped. The past month has been nothing but a nightmare for them. One center alone lost a staggering 60% of its workforce. And as of April, statewide, these centers are able to serve 23% of all the kids that are available to serve. There is a waiting list of over 100 children statewide. So they are not nearing the metaphorical cliff. They're standing at the precipice to ensure their continuation. They are seeking support of seven to $9 million annually to boost wages that would enable them to continue providing care to these kids if they go away. There are places they can go. Institutions. Icfdd nursing, which averages $150,000 a year, or ICF, or pediatric subacute facilities, can exceed $450,000 a year. In stark contrast, Pdhcs cost about $74,000 a year. So investing here allows children with medically fragile conditions to experience a general quality of life. It enables two income parents to maintain their livelihoods and prevent single parents from relying on public assistance. Seven to $9 million. Thank you for your attention. Happy to answer questions, happy to be part of the process.

Ms. Epps, hit the mic button, please.

Thank you. Okay. Chair Wood. Chair Arambula, Members of the Health Committee. My name is Lisa Eps. I'm president of Cal AAMS, the California Association of Air Medical Services, and I represent California member programs with an emphasis on improving safety and education in the medical transport environment. I've been in the air medical industry for over 30 years, starting as a flight nurse with Skylife in central California and remain nationally certified. I'm currently working as an account executive for Air Methods that operates both Mercy Air and Skylife programs and live in Fresno County. I'd like to address today the urgent need to add funding to the Emergency Medical, Air, Transportation, and Children's Coverage Fund, or EMATA, or supplement medical reimbursement for emergency air transportation. Chair Wood thank you for your leadership in the past for the EMATA program, having previously authored this legislation, emergency air transport ambulances transport patients with time-sensitive injuries and conditions, often from remote locations or from one medical facility to another. A recent rural example of Skylife brought a blood directly to the remote scene of an accidental brain shooting where patients carotid artery was severed, and without air transport, he would not have made it to the trauma center in time and likely would have died. The EMATA program, though, is more about funding. It's also about access. In our career, I have seen rural hospitals in the San Joaquin Valley area close most recently, as you know, Madeira Hospital, but also Chochilla, Danuba, Corcoran, Kingsburg, another in Hanford have all closed, where ambulances then become their primary access for critical care. Currently, medical reimburses air ambulance at one $800 per lift in 2022 per loaded patient mile for an average 70 miles transport. That's less than 50% of Medicare reimbursement and only 28% of our median cost. The EMATA program was created to provide essential funding to ensure these medical patients continue to have access to life saving care. For speaking for Air Methods, we roughly do 2500 to 3000 EMATA transports per year. Without an alternative funding mechanism, EMATA Fund will be completely drawn down, putting California at risk of losing these underserved critical access in these underserved areas. Based on 2022 transports, we've estimated that one fourth of California basis would be put at risk for possible closure, with another 25% on the edge of operational viability. We respectfully request us at the committee support funding to augment medical reimbursement for emergency medical transportation. Thank you for your consideration of this timely request.

Thank you. Next, we have the Adult Day Services.

Thank you for the invitation to join you today for this important conversation. What makes my heart happy is that there's been recognition that health and human services make up a tapestry of care for people who are individuals and whose needs vary greatly across our wonderful diverse state. I serve as the Interim Executive Director for the California Association for Adult Day Services, which represents providers of Medi-Cal funded, community based adult services, otherwise known as CBAs, also known as Adult Day Healthcare for those of you who've been around for a long time. And we represent members across the state of all sizes and shapes. CBA's members offer life-saving services to more than 40,000 low-income, frail elders and people with disabilities, including people with serious mental illness and those at high risk of homelessness. At a time when adults are the fastest growing unhoused population in California, our centers provide stability and one-stop access to services that include required daily nursing, social work, therapeutic activities, individual dietary services, occupational therapy, PT, speech and transportation. And one of the strengths of our centers that I am so proud of is that they offer services that are culturally and language congruent. In short, CBAs ensures vulnerable populations can remain safe in their homes while providing their caregivers with respite so they can stay in the workforce and continue to support families. Now, what if I told you that providers of this exemplary model of care, one that serves as a lifeboat for tens of thousands of vulnerable Californians, that keeps them housed and healthy and safe, are reimbursed by medical managed care at a daily rate that hasn't changed in 17 years? Yes, 17 years. The current Medi-Cal published rate is $76.27 for all those services. If you calculate that to a per hour cost, that's $9.50 an hour for an eight hour day. Within that rate, centers also have to provide or arrange transportation and provide a meal. The inflationary pressures today just on those costs and our workload challenges and wage and benefit pressures has been punishing. To add insult to injury, there are several large managed care plans that are still paying CBAs providers at the 10% reduced rate. So that brings us down to $68.64 a day that you all adopted during the Great Recession. Even though the Legislature restored that rate back in 2019, simply taking inflation into account going back to nine, the published Medi-Cal rate should be closer to about $100 a day, depending on the region of the state. And that doesn't even account for medical inflation and the healthcare workforce recruitment and retention crisis. And I just found out that the Federal VA publishes rates by geographic area in California. They pay well over, sometimes as high as $180 a day for this very service. That's the Federal Veterans Administration. These rates are not sustainable. For centers to continue to provide these valuable services and meet regulatory requirements dean, you could have written all of my talking points for me. CBAs we developed a pro forma budget using public data for LA County to compare costs and staffing levels to current reimbursement, and it shows, to provide competitive wages and benefits and lease costs and all the other costs. Just in LA County centers would operate, and some are operating with a structural deficit loss of $600,000 a year. That is not sustainable. Centers lose money for every medical patient they take, and they have no way to shift costs to Medicare or other payers. Along with the strain of the pandemic and these massive medical system changes you are all talking about, chronic underfunding is bringing our provider community to the brink. 14 centers have closed since the public health emergency began. That's out of about 270 centers and chair wood in your district, marin Adult Day Health Care just closed in April, and four closed in your old assembly district just in the past decade. Dr. Arambula, just as another example, your district lost a large center called Safe Harbor that specialized in care for people with mental illness. Losses are most acutely felt in rural communities, where there may be only one or two seabast centers lodi, Madera, Modesto, Bakersfield, Tuolamy, Paradise, Monterey. And that's just a few. I have a full list of centers that have closed over the past decade. I even go back 30 years if you're interested. Happy to share that with members of the committee. If the aim of the hearing today is to find ways to improve access using the MCO tax, please know that our industry is in peril and many vulnerable, low income Californians cannot access the services they desperately need, and that will only increase over time as our population ages. We urge you to use whatever resources result from this MCO tax to increase CBAs provider rates. And very important, ensure that these dollars are passed through the plans to reach our providers directly. Thank you for your time in this conversation today. Greatly appreciate it.

Thank you, Mr. Horne.

Hello, Chairman Panel. Thank you for having us today. And I'm Steve Horne, president of California Medical Transportation Association since 2007. And I'm also a Medi-Cal provider since the early 2000s. California Medical Transportation Association we're the only trade association in the state that represents both nonemergency medical transportation NEMT and nonmedical transportation, which is your ambulatory. Curb-to-curb type service. Transportation services are critical for millions of Californians to access necessary and life-sustaining health care services. And unfortunately, the current rates payers offer medical, and a lot of the significant MCOs do not even cover the transportation provider's cost to provide the services they're extremely inadequate, which has led to a shortage of providers, an inconsistency in services for members and for patients to have regular stable transportation that they can count on. According to the California Healthcare Foundation recent study, enrollees using Medical Transportation report that it's the main source of their transportation to their medical appointments and that safe, reliable transportation services are critical to maintaining their health. Raising medical transportation rates and oversight of payers for medical is necessary not only to ensure patients have access, but to have a sustainable and robust provider network. One of the interesting parts with transportation is it is not a benefit of Medicare. And so in the MCO tax, they talk about the provider rates being 87 and a half percent of that. And we've proposed different ways that we could come up with the department to study cost. Years ago, the department used to do cost-based studies to see what it actually cost. And as we know in different rural districts, it cost a lot more for a provider to provide that service than it does in some of the urban districts. But it is critical that we take this opportunity now to put a sustainable rate together for transportation. Because as I listen to the first panel and as I listen to this second panel, transportation, we interact with every one of these provider types. Everybody talks about access to care and they talk about all of these services. It's transportation related. And the majority of the medical members are utilizing either NMT or NEMT to get to their medical services. So it is a frontline access to care issue that needs to be addressed. Appreciate your time.

Thank you. Finally, Mr. Chalios.

Thank you, Dr. Arambula, Dr. Wood members. I'm Dean Chalios. I'm the president CEO of the California Association for Health Services at Home. And I'm pleased to be here today to talk to you about medically fragile kids and the importance of having them treated in their homes rather than in hospitals or other health care facilities. These are medical beneficiaries and these kids are really sick and they need the kind of care to stay at home that their parents and their families simply cannot provide. So we rely on what we refer to as private duty nurses to care for them. These are highly specialized nurses to help women with their feeding tubes and their ventilators and provide other life-sustaining services. Unfortunately, medical reimbursement rates aren't enough for us to find these nurses and to pay them what they deserve to take care of these patients. And so the end result is they end up staying in the hospital at 5, 7, 10 thousand dollars a day, whatever it might be, when we could care for them at home for about $1,500 a day depending on the level of care that they need. If you look at the 40% increase we're asking for in this particular area and you compare it to keeping these kids in the hospital, it is a net benefit for medical in the long run. These kids truly suffer and their families suffer. Imagine having a child who's been in the hospital for weeks, if not months on end, and they've been authorized by the medical program to go home and to be with their surrounded by the love of their families and to be cared for safely and adequately in the home. And they have to stay in the hospital because we can't find the nurses to take care of them. I thank you for the opportunity to come here today. I could talk to you all day about this. I won't. I know that the hour is late, but I appreciate being here. I'm happy to answer any questions.

Bring it up to the dias to see if there are any Member questions. We'll begin with Assembly Member Patterson.

Thank you. I especially want to thank Chair Arambula for your interest in the PDHC care. And it was evidenced by a recent tour in our area. It means a lot to those families and to those children. And we are hearing the crisis of these little ones that need every help we can possibly give them. The spiral downward is breaking my heart. These are little ones that really need us. And I'm afraid that if this panel and if the bureaucracy doesn't listen here and act, this downward spiral will get worse and worse and worse. And so I have signed the seven to $9 million, but I didn't sign it. A lot of the parents and a lot of these fragile children held my hand when I signed it, metaphorically speaking, but that's what I felt like. So I appreciate the opportunity to ask just a couple of questions in our area. And one of the things we do is we have a very robust constituent service operation and my staff in the Fresno office really see this as a mission, not just a job. We are hearing of a lot of waiting lists. How long are these waiting lists? It's one thing to wait for a period and then actually get help. It's another thing to simply wait and wait and wait and never get help. What's this like?

Thank you, Assembly Member Patterson. I appreciate that. It's a tough question to answer. The only way to do so in a fair way is to indicate that we can't specify exactly what happened in the past 45 to 60 days for the staffing of these facilities. But the loss of staff has been almost surreal. It's happened so quickly and so severely. So the facilities simply do not have the staff. And the waiting lists are probably indefinite unless there is relief. They cannot create staffing out of nothing. They have to obtain staff somewhere. And the only way to do that is through increased wages to make them competitive with other providers. And for that reason, I cannot give you any sort of direct answer as far as how long that waiting list might be. It just is there and it is likely going to increase in the scope if they can't have relief.

I heard the word indefinite used. So where do these children go when PDHC cannot care for them?

They go to institutions or in some cases, if they're able to, they must go home. And that requires if the family is fortunate to have two parents, then one of them has to quit their job to take care of the child full time or they must go to, as I mentioned, either an ICFDD or a pediatric subacute facility, both of which are exorbitantly more expensive and costly for the care. They are institutions. They are for individuals of all ages. Pediatric day healthcare centers are for children and young people. So there is in addition to the cost effect, there is the fact that these most severely are disabled or impacted children will be around a demographic that is foreign and not like them at all.

You mentioned the alternatives and all we hear from parents, particularly in our district, when they are given the options, they're options that they either can't afford or can't make work without continued care. And so the obvious question is if you don't get the increases, if you don't get the staff, if you don't turn this from a catastrophe into something that at least can be handled and managed, what are you going to do if we don't increase the rate?

In many cases, some families will have to go on public assistance. In many cases, families will have to relinquish their kids to institutional institutions. There is no satisfactory alternative. They are all not just bad, but terrible options.

Appreciate you being here. I know we visited and as mentioned, I've toured the center that Member Arambula toured. And these little kiddos are they're in very difficult circumstances, but they are so easy to love and I hope we can get that in our hearts so that it will help maybe get the rates up for their sake. I'd like to talk a little bit about the patients being affected. With respect to the Medical Transportation Association, one of the things that's kind of dear to me is we have a number of centers in Fresno that do dialysis and they do it exceedingly well. And one of the concerns I have is that there are patients who cannot get their transportation that they've relied on to get to their dialysis treatment and then that puts the burden either on the family or somebody close or what uber I don't know. But it seems to me like dialysis patients with that added extra burden and can't get to the treatment or periodically, that's a real problem. So help us understand how are patients affected by this? What do they do if your providers say the rates are so low and you put it out for the people to connect people up with the transportation and they say, no, I can't do it because I lose money, what does that patient do?

That's a great question and it's one that providers face on a daily basis. Do they incur a financial loss to provide that service and subsidize the state in order to maintain that transportation for that member. And many providers have done that for countless years to where they will take those ones that are at a loss because they care about the patients and they hire drivers that are in the community in those situations. Now unfortunately, in the Fresno area, since February 1, under the CalAIM project, where the majority of Medi-Cal fee for service members got moved over into managed care, the managed care organizations that cover that area use a transportation broker model. And so then there's another hand in the pie that is impacting those reimbursement rates. And so those providers are getting paid even less than providers that work directly with a managed care plan that manages their transportation in house. And there have been thousands of dialysis patients that haven't received transportation since February 1 of this year. And yes, the primary reason is due to the low reimbursement rates in that area. It happens to be that the brokers are forcing the rates even lower. And so providers are going out of business or just choosing not to provide the service. Then what that does is that impacts your acute care hospitals. These people miss a couple of dialysis patients, then they're in the hospital and then the hospital, I heard them talk with the hospital association that they're saying, hey, and they're having trouble discharging these members out of there because they can't get transportation to get them discharged even if they can find an appropriate skilled nursing facility. So it impacts everybody across the board. And when you look at the cost of providing transportation at a sustainable reimbursement rate compared to acute inpatient hospital stays, skilled nursing stays, those scenarios, it's much cheaper to pay that on the front end and it's a better quality of life for these individuals. But it has been daunting, especially since February 1, all across the state.

So to understand that correctly, these brokers have been introduced recently and those brokers add to the cost, right? You got a third hand here in the equation, is that right?

That's correct. And brokers were first introduced on a small scale in the state of California in around 2012, but it was a very small scale. But under the Calaine project, with the push of almost all the Medi-Cal fee for service into managed care, then managed care organizations had to come up with a plan. In California, you have three delivery models, you have medical fee for service and we know that that's only about 5% of the population. You have the MCOs that manage the transportation in house and then you have the MCOs that use a broker, the MCOs that manage it in house. They are quick to address the issues. They pay higher rates immediately. If they cannot get that access, then they say, okay provider, what is it going to take in order for you to do this? They will agree to pay that provider a higher rate to make sure that that access is there. But dealing with the third hand that we talk about with the plans that use a transportation broker that has created a huge access issue all throughout the state. And yes, it goes down to rates and the rates that the brokers are willing to pay the transportation providers.

Ms. Chair, thank you for the opportunity. We're seeing before our very eyes the crumbling of a system that takes care of the most vulnerable, the youngest and the sweetest. And I'm going to try to do everything I can and I'm grateful for the help of the chair and others as we try to do a little bit to alleviate some of these difficulties. But I thank you for your presentation and I thank you for your willingness to hang in there and do the work, even with these kinds of challenges. Thank you for the care and love that you show even when you are compensated at a loss.

I'll bring it back to the Chair and be brief with my questions so that we can get to public comments. But do want to uplift having seen Loretta's little miracles, the work that is being done on the front lines; when you ground yourself in the people who you are serving and representing, you're better able to advocate for them. And was appreciative of the opportunity of seeing what we need to be changing here in our state. And I'm grateful for the agreement here on the Dais for us to be working in that space. I'm going to focus on transportation if I can. I had the privilege of working with Skylife for a number of years and want to jump into the EMATA if I can and provide an understanding for those who are again here on the Dais that we've made recent changes to EMATA by removing fines that we're adding into that system. Thus have created a hole and an issue that we have not resolved. Hoping you can provide some comments to that.

Yes. Thank you, Chair. Yes, correct. EMATA fund was an emergency. Air transportation and children's fund. It was a $4 tax levied on moving violations and that expired at the end of 2022. So we have a gap. Right now we're seeing the Fund Dwindling that supplemented these Medi-Cal transportation flights that we were able to do.

Having been there, again, where moments matter, it's an invaluable service to make sure that we're continuing to provide for our state. I'll now move on to Mr. Horne, if I can, this transportation broker model. I look forward to future conversations with you to better understand the impetus for the transition. But I want to ask, how is this additive? How is this helping us as a system to have these broker models versus ensuring that the transportation dollars are reaching those who are transporting those who have needs? I would love to see how you think this is additive, if possible.

Well appreciate the question and I do not have an answer for you because back in 2012 I did not agree and I fought the broker model because I've seen it. I've got a ton of data here in studies and studies of other states that went to a transportation broker model and none of them achieved savings. They had different types of models than when they went to a broker model. And really transportation can seem pretty daunting to a managed care plan. Like we've got to have all these phone calls, we've got to do this, we got to do that and then it can get seem like it's overwhelming. But there's a lot of plans that have proven that it has higher patient satisfaction, less no shows people get to the services that they need when the plans manage it themselves. And it's been night and day difference. One of the best plans here in the state of California is Partnership Health Plan. They exemplify how to keep a robust provider network and they pay well above the medical fee for service rates and have for years for that to make sure that that access for their patients are there. There's a significant amount of other plans that do that same thing. I just happen to work a lot with Partnership Health Plan. They exemplify and they put some models together that other plans. All these plans talk and communicate together. They hire people that live in the community that work to call centers, that know the people that are calling in for these appointments. Just the outcome is better. But the brokers came into the state in 2012 and they've been here since then and they've continued to grow their presence. But in these tough fiscal times I don't see how it's sustainable.

I look forward to those ongoing discussions as we are looking to make advancements and innovations within Medi-Cal. We should not be siphoning off dollars to third parties and instead make sure they're going to the designated transportation agents who are caring for our community members.

Thank you. I look forward to that.

Want to follow up if I can. Final question for the adult day services. You said the plans are not passing down rates which were approved in 2019 and hoping you can give some comments to that as that sounds concerning. Again as the intent was there to make sure we were supporting an industry that is going to be needed as we help to deinstitutionalize or focus on providing care to those in community. Hoping you can comment on that statement.

No, happy to and I'm glad you asked because we've been also trying to get to the bottom of why that is. When the vast majority of plans did pass through that rate increase and some are actually paying a little bit more. The four plans that we understand through a third party have not passed through that 10% increase. I can't tell you exactly why that is other than the language in the 1115 waiver governing the CBAs reimbursement rates when we spoke to legislative counsel seemed clear that that was a requirement that be passed through. But in talking with the Department of Healthcare Services and others, it perhaps is not as explicit as it could be. So we would love to see that clarified that that published medical rate be the floor. And when the Legislature acts to restore rates as you did, that, that is respected. There is one health plan that has begun voluntarily issuing repayments for those underpayments. Going back to, I don't remember now if it's January or summer of 2019, but they have started to make whole the centers slowly, and we just saw a letter where they're planning to accelerate that timeline. So one out of the four has taken some action to make the centers whole. And those are large plans, Non-Cos plans, by the way.

Again, look forward to those conversations as implementation is important as we look to make sure that what we're doing up here is effectuating change in community. And so we need that feedback when certain systems are not ideally working and want to appreciate this entire panel for providing that level of granularity so that we can get into the details with that. I will thank very much this panel and we will now move on to public comment.

And thank you. If you'd like to make a comment, please press 10 at this time.

Operator, we're going to begin with public comment that's here in the room first, and then we will be going to the phone lines afterwards.

Thank you. Good afternoon, Linda Nguy with Western Center on Lawn Poverty. Firstly, we want to thank the chairs for hosting this hearing as well as the department for working on a much larger and accelerated Nzo tax to ensure that there are no cuts or delays to planned expansions and future investments that focus on increasing access, quality and equity. We support the proposed base rate increases and targeted provider rate increases focused on known access areas, some of which were highlighted in the last panel. And we also share the chair and members concerns that a more impactful tax is spread over a shorter period of time rather than ten years. Thank you.

Good afternoon, chairs. Thanks for holding this hearing. I'm Erica Murray. I'm the president and CEO of the California Association of Public Hospitals and Healthcare Systems. We represent the 21 healthcare systems across California that comprise just 6% of all hospitals, but provide 35% of all hospital based care for the state's medical program. Really want to thank the department for thoughtful reintroduction of the MCO tax and appreciate future conversations as we think about where there's particular need in the medical program. And to that point, I would point to our public health care systems, who of course serve emergency trauma burn, but also we operate 100 federally qualified health centers and have an important space in primary and specialty care across California for those who are most historically marginalized. So we look to the MCO tax as an important opportunity to stabilize and protect access for all those who are served by public health care systems. Thank you.

Thank you.

Good afternoon, Chairs. Dr. Wood and Dr. Arambula. Yeah, Dr. Wood and Dr. Rambula. Sorry. Connie Delgado. On behalf of the District Hospital Leadership Forum These are the 33 district and municipal hospitals and really appreciate the conversation here today and the recognition that hospitals, particularly those in small, rural, and underserved communities, are struggling and appreciate, again the conversation and would like to align our comments with having the funds distributed in the most quickest way possible. Thank you very much.

Thank you.

Thank you, chairs. Tim Madden, representing the California Chapter of the American College of Emergency Physicians and Emergency Physicians respectfully request to be included in the provider rate increases with the MCO tax. Briefly, emergency physicians disproportionately are impacted by Medi-Cal visits. Coming in the emergency department, we see more than 6 million medical enrollees, which is roughly 42% of the volume of emergency department visits. For communities that have 60% to 70% medical enrollees, we see 60% to 70% of medical enrollees. We are not choosing who we see in terms of rates. We're typically in the 54% to 59% of Medicare in terms of reimbursement. How that translates is really access for those communities that have the higher Medi-Cal populations. Those facilities may have one emergency physician that's there 24/7 versus a community that has a lower level. They may have two to three emergency physicians. So if we're able to increase reimbursement it'll increase access within the emergency department and provide better equity for all our patients. Thank you.

Thank you.

Good morning. Rand Martin here on behalf of Aveanna Healthcare. We're a member of the California Association of Health Services at Home. Do want to echo Mr. Chalios' comments earlier relative to private duty nursing and add one additional factor that we'd like you to consider, and that is there is a waiting list that we estimated over a thousand families across the state of California. And waiting list, I have to tell you, is a misnomer. It's actually a dead end list because you never get off of it if you're a medical patient, if you're a commercial patient, you have a much better chance. But Medi-Cal patients stay on that waiting list forever. And so we know that with the expansion of the rate for them, for this population, that we'll see a reduction in that waiting list over a longer time. Thank you.

Thank you.

Hi there. Cate Morrison. I'm with Maxim Healthcare Services. We're a provider of private duty nursing in California. We have over 21 offices. We serve 18,000 patients through the state and have 17,000 caregivers that we employ. And I just want to echo what everyone said. We have over 1000 kids weighed in in hospitals for care. A rate increase will go a. Long way towards getting them home where they want to be and where it's cheaper. Thanks so much.

Thank you. Seeing no further public comment here in the hearing room. As a reminder, the phone number and access code is on the subcommittee's website and should be appearing on the screen. If you are watching the live stream, the number again is 877-692-8957 and the access code is one eight. With that operator, let's begin.

Thank you very much. Please press 10 at this time. If you'd like to make a comment. Again, it's 10. We have a number in queue. Here we'll go to first line number twelve, please go ahead.

Thank you. Chairman and Committee members Katie Layton, on behalf of the Children's Specialty Care Coalition, testifying in support of the inclusion of private duty nurses in the list of providers eligible for rate increases under the proposed MCO tax. Our physicians can attest to the difficulty of discharging kids, particularly those who are technology dependent from the hospital due to lack of nurses to treat their needs at home. More competitive rates for private duty nurses are necessary to make this care more accessible. We also look forward to working with the legislature and administration as other provider types are considered for rate increases under the MCO tax. Pediatric specialty physicians treat children and youth with chronic and complex conditions. Yet this population of children experiences serious access challenges and month long wait times in many specialties due to the shortage of physicians, a situation which only continues to worsen. Rate increases for these providers have not increased in over two decades and fall well below Medicare levels in the aggregate, making recruitment and retention extremely difficult. This is a health equity issue as these physicians are critical safety net providers who see a high volume of medical children and families, sometimes upwards of 70% of their payer mix. So again, we look forward to continued conversations around increased rates for specialty care physicians. Thank you.

Thank you. Next caller, please.

Good morning, how are you? This is Katy Krul, I'm administrator at Oxnard Family Circle. It's adult health care. We are community based adult services to seniors and disabled adults. We serve individuals from historically underserved communities. These individuals attend our center during the day and our care avoids them from the placement of nursing homes. Here's an example of one in which just happened this week. His name is Harold and he's 95. He was brought to us by his son David. Harold thinks that the David is his brother, not his son. Okay? He lives with his wife and he uses wheelchair. He has multiple diagnosis, stroke, dementia, Alzheimer's, depression. He is incontinent. He had multiple faults and the last one was in March, and he was hospitalized because of that. He has a wondering risk and could be verbally abusive and physically abusive toward his son. Has history of alcohol and smoking. So what we do for this man, we transport him to our center and back home. We administer his medications, we provide physical therapy, social services, stimulation activities, we help him with all the living needs, his daily living needs. We offer him to hot meals, we toilet him, offer hygiene, care. And now I'm at my main point. I'm here to say that the caregiver shortage is real. They are crisis because they are not enough to support people like Harold individual at home. So organizations like mine, community-based services is the only solution for these individuals to stay at home and not to be placed in institution to.

Hi, thank you guys for hearing me out today. My name is Katie, and I'm mother to Beau, who attends a pediatric day health care center in Fresno. I wanted to give you guys a parent perspective. Our son Beau is one of only 400 in the world living with his rare neurological disorder. It is a progressive disorder that has a course that will only get worse with time. He doesn't walk, he has trouble communicating, he's been diagnosed with an intellectual disability, his optic nerves are dying, he will eventually go blind, and he's at risk for seizures, amongst a few other complications. And we've been with Loretta's for a little over a year now, which is our local facility, and the nurses that take care of our son and the other children that go there, they have such a special heart, and I think it takes a special heart to take care of kids like that. Not only are they cared for medically to help with their therapies and help with their care needs, but they provide love to our children who already struggle so much. So I wanted to give a perspective that if something like this were to close, which is on the cliff that we're at, we would not be able to maintain our jobs. My husband's a police officer, and I work in higher education, and we would undoubtedly have to go on more government assistance versus serving the community in the way that we do. .

So thank you for taking the time to listen to our heartfelt please and keep our kids taken care of so that they aren't at any risk for serious health complications as normal daycares not only can't take care of them, but they refuse to. So thank you for your time and we all appreciate you very much.

Thank you. Next caller, please.

Line 35.

Hi. This is Kristine Shultz, executive director for the California Optometric Association. Thank you so much for holding this hearing. We support the proposal to reinstate the MCO tax, and we encourage you to increase vision care reimbursement rates. Vision care is primary care. Medical enrollees who don't see a physician on a regular basis end up in our office when their vision changes. Regular eye exams are the first line of defense in detecting early signs of eye and systemic conditions that affect the eye, like diabetes, high blood pressure, and hypertension. We were able to get these enrollees diagnosed earlier and therefore reduce overall health care costs. Reimbursement rates for vision services have not been increased in over 20 years. Rate reductions made during the Great Recessions have never been restored, and as a result, the California has the third lowest Medicaid reimbursement rate for eye exams in the nation. As much as they want to, optometrists are increasingly concerned that they simply can't afford to keep participating in the medical program. We did a survey, and more than nine out of ten optometrists said patients are having a hard time finding a provider in their area. We need significant investment now to make sure we don't lose the providers we have. Thank you for your consideration.

Thank you. Next caller, please.

Hello, thank you for holding this conference. I'm a private nursing provider and I specialize in home health, and I strongly believe it would benefit the state of California to increase money towards home health workers. It would improve their quality of life due to the fact that because these workers have access to more resources and good quality resources, and the patients quality of life will improve as well, because the patients will feel a sense of familiarity by being inside of their domicile. And when a patient is cared for inside their domicile, their quality of sleep improves, their loved ones will be around more often rather than in a facility, and they will be less likely to develop no psychomal infections. Thank you.

Thank you. Next caller, please.

Good afternoon, Nicole Wordelman. On behalf of the Children's Partnership. The Children's Partnership supports the May revision proposal to request a larger MCO tax starting April 1, 2023. Additionally, we urge the legislature to include increased rates for community health workers, supplemental payments that advance equity, support for prevention activities for medical members, and comprehensive perinatal services. Thank you.

Thank you. Next caller, please.

Thank you, chairman and committee members. My name is Githika, and I am a mother of a medically complex child, Aidan. I'm asking you today to continue to support the 40% rate increase for Pediatric Day Health Care Centers. My son Aidan has been cared for by Loretta Little Miracles for almost two years. He has been diagnosed with the rare genetic disorder known as Pitt Hopkins Syndrome. At the age of three and a half, he still struggles with reaching his milestones. He cannot walk, stand, fall or talk. His needs require skilled nursing care. Unfortunately, due to the current medical rate, loretta Little Miracles is unable to compete against local hospital. To put things in perspective, last year, during a COVID surge, local community hospitals paid the registered nurses more per day to work overtime than what their own hospital doctors were being paid per day. At that same time, Loretta Little Miracles had to close for a whole week because they did not have enough staff there. Which led me, as a pharmacist at a local hospital who works at critical Care, to take time off from work to care for my son. As you can imagine, this was a huge ethical struggle for me, because this was a time when my patients, medical team and community needed me the most. Mr. Patterson you had questioned. What will I do if Liberetta little miracle closes? In my family situation, we would either have to, one, institutionalize my son or two, I would have to stop working, and my husband would have to work part time because as one person, I am unable to physically and mentally care for my son full time. This would mean that the quality of life of my family would decrease. In addition, we will lose access to our private insurance, which just in 2022 paid for $60,000 worth of my son's medical bills that otherwise Medical would have been responsible for. I thank you so much for your time today and your support and listening to us and learning more about our journey.

Thank you. Next caller please.

Line 52 52.

Good afternoon, Mr. Chair and members. Ronald Coleman Baeza, here on behalf of the California Pan Ethnic Health Network. CPEN. CPEN supports the May revised proposal for a larger, sooner MCO tax, which provides critical funding to increase access and advance equity in Medical. We support the Administration's proposal to ensure adequate base rates for primary care, obstetrician and gynecology, and also non specialty mental health care services. CPEN and over 40 community based organizations submitted a letter urging DHCS to include community health workers in the rate increases as well. Community health workers are essential for many initiatives currently underway, including Calam, children's preventative services and other equity focused programs. CHWs are currently paid less than 87.5% of Medicare for non physician education and management services, and as a result, Medical is struggling to get the new benefit off the ground. We strongly urge the legislature to ensure that CHWs are included in the MCO tax proposal in the final budget. Thank you.

Thank you. Next caller please.

Line 60.

Good afternoon. This is Diana Douglas. On behalf of Health Access California Health Access generally supports the administration's proposal for a larger and more immediate MCO tax. We do, however, recommend spending over the condensed three to four year period to make the most of resources and limit the uncertainty that could occur over a prolonged spending plan. We support proposed base rate increases along with future strategic supplemental increases that would use a data driven approach to target gaps in access to care across regions. And specialties thank you to the administration and the legislature for their work on this important issue. Thank you.

Thank you. Next caller please.

Line 54. Yes.

Hi, my name is Amanda Phillips. I'm a private duty nurse and I'm also an adoptive mother to a medically fragile child. I'm calling to advocate for a portion of the MCO tax to be used for a rate increase for private duty nurses. I used to work in a pediatric hospital and I went into private duty nursing because I saw so many patients on our floor sitting for weeks at a time at the exorbitant rate that a bed cost at a hospital just waiting for a nurse at home. And that led me down a journey. But I take care of my daughter and we are well and everything is great. And I've been able to keep her out of hospitalizations many times because of the trust of a physician, knowing that a nurse is at home. However, I get calls, I get frequent phone calls that are heartbreaking from parents because I think my name is listed on registries as a provider and they call and request if I am able to care for their child. Might say that I don't have the availability, but more often than not, the parent ends up in tears because by the time they're calling me, they've called every agency and they are at the end of their rope on trying to find care. And I know that that is because the pay rate for RNS and LVNs is just not sufficient to keep them in that role, especially with what hospitals are paying nurses right now. So I just would advocate and implore you to consider allocating some funds for that rate increase. Thank you.

Thank you. Next caller, please.

Hi, good afternoon, assembly member members. My name is Rose Paling and my son Elias, he also attends Loretta's Little Miracles and I'm asking for you guys to strongly support that 40% rate increase for the Pediatric Day Health Centers. I just want to touch a little bit upon my son. He has cerebral palsy. He is severely developed, mentally delayed, at risk for seizures, blind, wheelchair bound. Now, Loretta's has been my respite. Now a year ago I've had to quit my job. I was a pharmaceutical rep. It was a wonderful job and I had to quit because of the earlier time start times for elementary school students and I wouldn't be able to work and come home by 230 to pick up my son. So now I've stayed home. So Loretta's is really what provides the respite for us. I think it was Assemblyman Patterson you asked about what we would do if we didn't have Loretta's. So there is an option of home health that is one and of course, institutionalization, but what the skilled nursing facility, it adds more than just care for the children. It is socialization. These kids are only getting bigger. So it's going to take more than one person to, let's say, carry the child if they're doing toileting needs or taking them from a wheelchair to a bed. And it's, of course, medications and it's being able to recognize whether the child is going into a seizure or not. It is extremely complicated. And I know that a bunch of you up there are doctors and, you know, the importance of recognizing this kind of quality of care. I'm advocating for you guys to please strongly support this rate increase because it helps us parents out tremendously. And that way we don't have to become a burden on the system and depend on the system and we can actually have and continue a good quality of life for our families. Thank you.

Thank you. Next caller, please.

Hi, my name is Arzalia and my son Donna is child for Loretta little Miracles daycare. And at age four, he started attending her facility for skilled nursing. And he's an active child, but he has a minimum of five diagnosis, and then when you ask for additional ones, he's up to ten. And he's only getting bigger. He's twelve years old and when he's discharged from a hospital procedure or for a hospitalization, he's able to go straight to a lettuce and get the skilled nursing that he needs. Also he needs a socialization cues that they teach there. He gets one on one care for school needs because she hired a teacher to come help. And she noticed the need that a lot of the children who are able to go to school and participate in school but still needs the extra tutoring. The increase of 40% is essential for her to keep skilled nurses, whether RN, LVN, or CNA there at her facility, she has a high turnover rate because everybody is needing more money to come into their paycheck. And the healthcare providers need that rate increase as well, because I just heard some heart wrenching stories where a lot of them, even in La, they're living in their cars, they don't even have food. And so this increase will put them back in a good place. And especially since COVID when you get one child gets COVID, the whole facility has to shut down. So not only does Loretta staff have to stay home, the children have to stay home, then the parents have to stay home because we don't have anyone to care for them. Thank you.

Thank you. Next caller, please.

Go to line 30. Please go ahead. Please go ahead.

Good afternoon. My name is Jennifer Francis. I'm the mother of two medically fragile children. My child is ventilator dependent and he was in a subacute pediatric unit. They charge $450,000 a year. Home care is $74,000 a year. My son is six years old. In the six years it would have cost $2,700,000 in a pediatric subacute unit, in six years, it cost 444,000 to stay at home. This is one year's worth of the subacute unit without all the love and care and hard work of the LVNs and RMS that come to take care of him. And this is priceless. And it is definitely economically wise to go this way. We have a lot of heart wrenching stories and a lot of time his life has been saved. And we're just grateful for what we have. And we would just like to attract more Ldns, more RNS to home health. But they're going off because they say they can't support their family that way. Thank you so much for listening and thank you so much for your time. Have a good day.

Thank you. Next caller, please.

Hi. My name is Tiyesha Watts. I'm calling in on behalf of the California Academy of Family Physicians and our nearly 11,000 members in support of the Mary Vision MCO tax proposal and medical provider rate increase for primary care. Proposed medical primary care rate increase will help patients gain access to care. Low medical reimbursement rates hinders family physicians ability to see more medical patients. With the proposed primary care rate increase funded through the MCO tax, more medical recipients will gain access to care. CFP supports great investments in primary care as strong evidence shows that great investments in primary care lowers cost, improves health outcomes and health equity, and increases the supply of primary care physicians. Thank you for your time and consideration.

Thank you. Next caller please.

Line 67 please go ahead.

Hi. My name is Meg Snyder. I'm with Axiom Advisors calling on behalf of Team Select and Prime Home Health in support of the inclusion of private duty nursing services in the MCO agreement. We fully support the comments of Dean Chalios with the California Association of for Health Services at home. Thanks so much.

Thank you. Next caller please.

Line 45 please go ahead.

My name is Jennifer McClellan. I'm the mom in Clovis, California. Special thanks to Mr. Patterson, who is my representative, and Dr. Arambula, who also represents the Central Valley, a region that is hit hard by health disparity. My twelve year old son is tracheostomy and ventilator dependent. He is able to live safely at home with our family thanks to private duty nursing pay for by medical. Children like my son depend on home nursing in order to stay out of the hospital and to stay alive. The nurses who take care of my son keep his airway open and keep him breathing when home nursing is underfunded. One risk is that kids get forced into institutions which cost medical more. The other risk is death. The other risk is death. Kids like my son need life sustaining nursing care in their homes in order to stay alive. For kids like my son, a 40% increase for private duty nursing paid for by the MCO tax is critical to keeping them safe in their homes and alive.

Thank you. Next caller please.

Good afternoon, Chairs Wood and Arambula. I'm Bryce Dockerty with TDG Strategies on behalf of the California Ambulatory Surgery Association, also known as Casa. Casa is a statewide association of outpatient ambulatory surgery centers, also known as ASE, whose members are leaders in reducing costs of the healthcare system as they ensure patients are treated safely in outpatient settings instead of other costly alternative sites of service. An internal survey of council members indicates the California ASCs provide care to hundreds of thousands of medical beneficiaries per year and often incur significant loss as medical rates do not keep pace with the cost of providing that care. Labor costs and the cost of implantable devices and other supplies often far exceed the reimbursement rates provided by medical. ASCs play a major role in the overall healthcare delivery system and save the system and patients significant cost. For example, UC Berkeley research has shown that every procedure performed in an ASE saves the Medicare program 40% and saves the medicare beneficiaries 50% to 60% in their copayments. Therefore, Costs urges this committee, these committees, the legislature and the administration, to invest a portion of the MCO tax toward medical beneficiary encounters in the outpatient ASE setting. Thank you very much.

Thank you. Next caller please.

Line 70 please go ahead.

Hi. Good afternoon, Chair Arambula. This is Janice O'Malley with AFSCME California. Just wanted to say that we appreciate the legislature's active engagement and discussion to updating the MCO tax, appreciate the work that you do and the work that Dr. Wood as well has done. As you have heard in the hearing today, there are many stakeholders who help support the healthcare continuum of service that are deserving of investment by way of rate increases to medical reimbursement rates. The low reimbursement rates have contributed to staff reductions and the stagnation of wages and benefits for the healthcare workforce as a cost to deliver care increases and providers attempt to ensure financial stability. And again, with the great work of this legislative body to expand medical eligibility to all Californians, we need to do more to ensure that they are able to access healthcare services. Panelists in today's informational hearing discuss the need for rate increases for ground ambulance services, which is sorely needed. Yet we have also not seen an increase to rates in 911 ground emergency services in over a decade, which again leads to stagnating wages for emergency services workers, a workforce that is worsening turnover year after year. We would appreciate consideration for the inclusion of 911 grant ground ambulance in the MCO tax. Much appreciation. Thank you.

Thank you. Next caller please.

Line 57 please go ahead.

Good afternoon assembly members, and thank you for this opportunity to share. My name is Elizabeth Jones and I am a registered nurse. My daughter Jocelyn has Rhett syndrome and requires 24/7 care due to being nonverbal, nonambulatory, non purposeful use of her hands and is Gtube fed. She currently receives in home nursing care. Last November, Jocelyn had an eight hour spinal fusion surgery and I was told the estimated hospital stay was seven to ten days. Because I am an RN and Jocelyn has in home nursing care, the surgeon agreed to send us home day four postop being home and with more individualized care, Jocelyn recovered much more quickly than staying in the hospital. Being home also decreased the risk of complications such as Nosocomial or hospital related infection. November is flu season. Not only was recovering Jocelyn at home in her best interest, but it substantially saved the state money from having her hospitalized for the whole anticipated postop time and lessened the chance of a prolonged stay due to a Nosocomial infection. Home nursing hours cost the state a few hundred dollars per day and Jocelyn staying in the hospital would have projectedly cost the state up to $10,000. Today, in home nursing care saved the state up to $60,000. And this is just one example for one patient. When my daughter is not hospitalized without in home nursing care, my daughter would have to be admitted to a subacute care facility as her medical needs are high. This costs the state at least $1,000 per day, whereas in home nursing care, again, is just a few hundred. I come to you as a taxpayer, a nurse as well as a special needs mother. I am asking you to please approve the request to increase the pay for in home nurses. The low pay currently results in a nursing crisis. For in home needs, there's a shortage because the pay is just not adequate. The turnover rate for nurses in home is also a crisis as they typically leave for better paying jobs to end. This crisis is in your hands. Thank you for your time.

Thank you. Next caller, please.

Line 74, please go ahead.

Hello. My name is Tina. I'm calling on behalf of being a special needs parent. My daughter is Leila and she is 13 years old. She's been going to Loretta's for 13 years since they opened. I really pride myself and my husband and Loretta for keeping her out of the hospital. In 13 years, she's only been hospitalized for being sick one time, despite all of her medical needs. She is non ambulatory, nonverbal wheelchair dependent, detoop fed. And if it wasn't for Loretta, if they closed down, it would be very devastating for us. In just in the 13 years we've been able to maintain our lifestyle, get the breaks that we need from the specialized care that Loretta provides to our family and even to even grow our family. We just really plead and ask you to consider Loretta's in the budget. Thank you.

Thank you. I got to meet Leila, and you're doing a great job, mom. Next caller, please.

And there is no more in queue at this time.

Thank you. I will take that as the conclusion of public comment for today's hearing, both in person and on the phone. I will begin by appreciating the administration and will uplift Director Bass who is still here hearing all of the public comment until the end of the hearing. I also want to thank the LAO for the handout and the information as we are making decision, as well as all of the stakeholders and panelists and members. And my co-chair who came here today also wants to appreciate the tech, the sergeants, but most importantly the public who we all serve with, that we are adjourned for today.