Assembly Budget Subcommittee No. 1 on Health

All right, Good afternoon. I'm going to call this hearing to order. And if you could, Committee staff could please call the roll.

[Roll Call]

All right. We are going to continue as a Subcommitee. So good afternoon and welcome to the Assembly Subcommitee 1 on Health. Today we are reviewing budget and fiscal issues related to the Department of Healthcare Services, otherwise known as dhcs, which is the largest Department under our Subcommittee's jurisdiction in terms of spending and the number of Californians this Department serves. Medi Cal, the department's flagship program, currently provides health coverage to nearly 15 million Californians.

So that's one in three Californians receiving health care through MEDI Cal. Three in seven of our state's children and 40% of all births in California are covered by Medi Cal. Part of today's hearing will address the Department of Finance's request for a state loan to cover a program deficit.

And while such loans are relatively common due to the fluid nature of California's budget, it is important that we do have transparency around how this request is calculated and the multitude of reasons this loan may be needed.

While some have sought to politicize this loan request and may see it as an opening to attack the most vulnerable Californian communities, we should all be clear about what the greatest threat to California's ability to provide health care really is.

And that is our own Federal Government that appears fixated on rectifying years of its own mismanagement on the backs of those with the least economic means who are seniors, people with disabilities, and others in our community.

And while the Federal Government appears to be poised to do this, we are reminded that they are using the very federal tax dollars that California gives at a higher proportion than any other state in our nation.

And we should also be clear that Medi Cal rising costs are not just the result of any one single factor or population, but that health care costs are rising across the board and across our entire country. Nationally, health care spending totaled 4.5 trillion in 2022 and is projected to reach 7.7 trillion by 2032.

Here in California, between 2015 and 2020, health care spending has grown 30%. California is doing groundbreaking work to look at some of the ways our state can address rising health care costs. We talked about the Office of Healthcare Affordability last time this Subcommitee held a hearing hearing.

And we looked at the statewide healthcare spending targets that are needed because healthcare costs are outpacing Californians incomes. We've also heard in the Subcommitee about the CALRX initiative, which is propped up as we try to tackle the unsustainable prices of prescription drugs. And we've looked at the Covered California subsidies, which are also under threat from federal inaction.

As we go through the conversation today, it's important for all of us to remember that California has made progress in expanding health care over the past decade. And in doing so, we have an astounding number. Close to 94% of Californians now have health insurance.

And it's something for us to be proud of because this same health insurance expansion has been critical in reducing poverty across our states. And studies show that in the absence of Medi Cal, poverty among children would increase exponentially.

It's the same health care expansion that has improved the financial performance of hospitals and other providers by reducing debt, charity care and reliance on emergency room for care. And we know that it's also stopped hospitals who are on the verge of fiscal insolvency, stopped them from closing.

And there is no doubt that Medi Cal is important to Californians. A February poll conducted by the NORC showed that Californians of every party line overwhelmingly support Medi Cal and view it as a critical service in our state.

So with all that being said, we do recognize that there are challenges with keeping Medi Cal sustainable amid rising healthcare costs. And we're committed to a very thoughtful, data driven approach to understanding options available to us.

And I just want to share with all of you here or those watching that you do have my commitment that we will be examining all of the cost drivers, whether they're prescription drug prices, provider rates, long term care, behavioral health, workforce shortages, and so many other things that can influence our decisions around access to care.

And I also expect the Department of Healthcare Services in the Administration to be full partners in providing transparency and the data that's necessary for this Subcommitee to do its work.

And I'll just reiterate as I close and turn this over to other Subcommitee Members that the proposal in Congress right now to dismantle Medicaid includes in concept slashing $880 billion from the program, which is the true and real danger for California.

We have a lot of work ahead of us and we have subcommittees here, Subcommitee Members here, and I'll turn it over to either of you or any of you if there are any opening comments you'd like to make, please.

Thank you, Chair. And as Vice Chair of Budget, I just want to bring a couple things up and I share the Chair's concerns. There is a lot of questions. We don't know what the Federal Government's going to do. There is a lot of concern, and I think it affects all of us in very, very different ways.

But I do want to say when a letter from the Department of Finance came out on the 12th, our budget staff had reached out to Department of Finance for some questions that we needed answered. And we talked about misinformation in the opening statement, which I share your concerns, but we can only speak truth if we get answers.

And so it's just my encouragement to the Department of Finance when our chief consultant reaches out. It's been five days and we've heard nothing back. So when we're trying to educate my caucus, my constituents on what's actually going on, we can't do that if we don't have answers.

And so I just think as we go through these hearings, and I really do appreciate it, information is important. If we want to combat misinformation, then we need the facts and we need information. So I just encourage us all to just keep that in the back of our heads. Thank you.

Thank you. So we'll move on to a few housekeeping notes. We're going to cover eight issues as listed on the agenda. And the agenda is online on our Committee's website, and there are physical copies available in that direction in the hearing room.

After we conclude a panel presentation on each issue, we will take questions from Members and then comments from the public. All public comments will be taken in person at the end of the issue, and those comments should pertain to the specific panel presentation.

And we will open to public comment for items not on the agenda at the very end of the hearing. For Members of the public who are interested in providing comments on the continuous coverage unwinding or the overdose prevention and harm reduction initiatives, I know there's a lot of folks that want to comment on those.

That's going to be under issue two on the Agenda. And we'd like you, if you possibly could, to keep your comments to 30 seconds. We know that everyone has something important to say. There's a huge line outside as well.

So if you can keep your comments brief, we do have a friendly timer that will go off to remind you of the time limits. And if you're unable to attend this hearing in person, you may substitute your comment.

You may submit your comments via email to asmbudgetm.ca.gov so we are going to move now into our first issue, the DHCS budget budget overview and medi Cal estimate. Background for this item is on page two of the Agenda.

And for this panel, we welcome the DHC Director Michelle Baass, DHCS Director Michelle Baass, as well as the Department of Finance and the Legislative Analyst Office.

And on this issue we are asking the Department to provide an overview of the 25-26 DHCS budget, an overview of the Medi Cal estimate, including additional background on cost and caseload trends, and additional information on the March General Fund loan to the Medi Cal program.

So please go ahead and introduce yourself before beginning your testimony and feel free to start when you're ready.

Good Afternoon Chair Members Michelle Baass, Director of the Department of Healthcare Services I will start with a brief overview of the Department Department's budget. DHCS administers the following programs Medi Cal is the Department's largest program covering just under 15 million Members. We also administer many of the behavioral health programs provided at the community level.

This includes mental health and substance use disorder services, primary and rural health care programs such as the Indian Health Program, American Indian Maternal Support Services and Tribal Emergency Preparedness Program programs and a variety of other family health programs that we will speak to In Agenda Item 2, the genetically handicapped Persons Program, California Children's Services Program and Every woman counts.

The 2025 Governor's Budget proposal for DHCS includes a total of $193.4 billion. This includes 191.1 billion for local assistance to support program cost and about 100.1.3 billion to support state operations. The budget also includes support for about 4,800 positions at the Department.

Major budget issues and proposals from the Department in the Governor's Budget includes the Managed Care Organization tax and Proposition 35 which we will talk about later in today's agenda.

The Behavioral Health Community Based Organized Networks of Equitable Care and Treatment or BHCONNECT is we refer to it is a demonstration waiver that was approved by the Federal Government at the end of 2024. The goal of this waiver is to really provide access and strengthen our community based behavioral health services and treatment.

Major components include about a $1.9 billion workforce initiative that will be administered by the Department of Healthcare Access and Information and I know this will be a topic of a future Subcommitee hearing with regard to the Medi Cal Local Assistance estimate for the current year.

The November 2024 MEDI Cal estimate projects 174.6 billion total funds 37.6 billion General Fund for MEDI Cal. This represents an increase of 2.8 billion General Fund compared to the Budget Act of 2024. The main drivers of this higher General Fund projections include dollars related to the increased costs related to redeterminations regarding the COVID unwinding flexibilities.

These cost the caseload impacts were smaller than previously assumed. Increased costs related to Members with unsatisfactory immigration status and this increase is primarily driven by higher than anticipated enrollment and increased pharmacy costs.

Additional higher pharmacy expenditures related to the growth beyond those with unsatisfactory immigration status and as noted, similar to other state Medicaid programs, California has experienced a notable increase in overall pharmacy expenditures for the budget year. The estimate projects 188.1 billion total funds, 42.1 billion General Fund.

This represents an increase of about 13.5 billion total funds and 4.5 billion General Fund compared to the current revised current year revised projections and the main drivers of these increased General Fund spending in the budget year include 3.6 billion in increased costs due to the availability of the MCO tax after approval of Proposition 35, about 215 million related to pharmacy expenditures and a net increase of about 270 million or so related to growth in managed care rates, changes in projected enrollment, growth in Medicare premium and Part D costs, among other things.

I will now move on to kind of comments regarding the loan. So on March 4, the Department of Finance activated a 3.44 billion medical provider interim payment loan to the Department really for the ability to manage Medi Cal cash flow and ensure we can pay our providers and plans.

And while the 3.4 billion is really noted in the agenda, that corresponds to about an 8 billion increase in federal dollars in terms of the matching so total kind of spend for the increased expenditures.

Additionally, we will be requesting an additional 2.8 billion consistent with the projected current year shortfall identified in the Governor's Budget that I just mentioned. With the loan and these additional funds, the Administration anticipates being able to manage expenses expenditures for the remainder of the current year.

We took these steps because it is important to maintain our commitment to our providers and plans to make timely payments for the remainder of the current year to ensure Californians and those on Medi Cal get the services in the current year.

The Governor's Budget projected the 2.8 billion shortfall again as I mentioned earlier, really driven by the overall higher enrollment due to the continuation of the eligibility flexibilities related to the public health emergency determination. As part of the Governor's Budget we propose to sunset those flexibilities at the end of the current fiscal year.

So ending June 30, 2025 higher than projected caseload and pharmacy costs for individuals with unsatisfactory immigration status and increases in pharmacy costs since the Governor's Budget, we are seeing higher expenditures and these are really related to higher caseloads, higher cost in managed care, fee for service, pharmacy and other program areas, and lower General Fund offsets from available drug rebates for prior year reconciliations.

The Administration authorized the maximum loan amount by current law to provide flexibility in managing cash flow and higher expenditures throughout the remainder of the fiscal year and again to ensure that we could pay our plans and providers on a timely basis for the care that they are providing to our Medi Cal Members.

The Administration is actively updating projections as actual data is available at this time. We know the shortfall is due to the timing of collection of revenues as well as projected expenditures in the current year, so the loan again was issued to help address these issues.

As a reminder, the MEDI Cal program is on a cash basis, so we score things when they actually happen. That's when cash is in hand compared to an accrual budget which records transactions when they occur, not necessarily when the cash changes hands.

This makes the timing of revenue receipts and reconciliations an important consideration for our budget and can have implications on our cash flow.

So for example, over the course of the last year, we essentially quadrupled the managed care organization tax revenue coming into the Department, and so the timing of those tax and fee collections is critical as we think about managing our cash flow. Budget projections are updated twice per year through the MEDI Cal estimate.

Work on the Medi Cal estimate begins months before it was released based on rolling updates of enrollment and expenditure data. For example, the 2024 Budget act was based on enrollment and expenditure data through January 2024. We only had one month of actual data reflecting the significant changes that occurred in January of 2024.

This included the elimination of the asset test, the COVID unwinding redetermined flexibilities and continuous coverage, and the expansion of full scope coverage to individuals aged 26 through 49, regardless of immigration status. These changes were unprecedented and all happened at once for the January's Governor budget release. So this is what came out in January.

Projections were based on data through July 2024. So essentially six months more months of actual data to help us build out our estimate and build out the trends for the upcoming May Revision data through January 2024 and later will be incorporated. So the Administration is working to provide an updated fiscal picture at the time of May revision.

So again, this will be based on January 2025 actual data. The more actual data that we have for all of these programmatic changes, the better we can do the estimates and trends for future future months and years.

Acknowledge that you are seeking line item information on the drivers of these increased costs and at this point we only have aggregated high level numbers for each category. At May revision, we will have much more detail for the information that you are asking. As you know, health care spending is generally increasing across the United States.

Other states are seeing increased costs in Medi Cal programs. For example, Colorado, Connecticut, Indiana and Maine all have increased costs above their budget appropriations.

Additionally, for some additional context for what other states are experiencing Kaiser Family Foundation's annual Medicaid budget survey for fiscal years 24 and 25 most budgets, most Medicaid budget directors thought that the chance of a Medicaid shortfall was 5050 likely or almost certain.

This is a significant change from 22 and 21 surveys where most states did not anticipate state revenue shortfalls and signals that some states will have to contend with Medicaid budget gaps in 2025.

A number of state officials commented on how challenging budget was at the time due to the downward expenditures, pressure of declining enrollment coupled with the upward pressure of increasing costs per enrollee during unwinding as well as the overall changes in the share of enrollees in each eligibility group.

States also noted uncertainty in the long term fiscal outlook due to emerging high cost prescription drugs and economic factors such as the cost of medical care and workforce challenges. In regard to the question about how much the budget growth is driven by capitation rates, what we play our Medi Cal managed care plans.

At this point the average capitation rate paid does not appear to be the biggest factor factor in increased spending, but again we are working on detailed estimates that will be available at the May revision. Wanted to also note there were questions about pharmaceuticals and spend in the pharmacy space.

Recent coverage expansions have Just like other states, the Department is experiencing an overall increase in pharmacy spend, which again really aligns to some of the experiences just generally across the healthcare sector. Recent coverage expansions have increased the number of Medi Cal eligibles who may access the pharmacy benefit through Medi Cal Rx, including those with unsatisfactory immigration status.

Additionally, the state has seen significant increase in the use of GLP1 drugs which are used to treat type 2 diabetes but have become popular for weight loss costs since the January budget also reflect lower General Fund offsets from from available drug rates.

As I mentioned, as we work through reconciliation of past supplemental drug rebates, again work is underway to update the unsatisfactory immigration spending projections Aside from the increased number of users, the average cost per claim is the other major driver of increased cost compared to the Budget Act.

We want to engage the Legislature as soon as possible to come up with measures together to to address the future funding of the Medi Cal program.

But again, the actions we took with regard to the loan and the supplemental appropriation were really to ensure that we can make our timely payments and meet the commitments to our plans and providers in the current fiscal year. Thank you and look forward to the questions.

Is there any testimony from Department of Finance or the Lao?

Laura Ayala, Department of Finance no additional Comments

Ryan Miller, Legislative Analyst Office we were hoping to just offer a little bit of brief context on the item and some of the issues you're hearing today. Just a bit of brief comments context on the item. This is something that's heard every year in the budget.

Essentially it is the sort of top line appropriation that will go in the budget for all of Medi Cal benefits and federal Fund spending. It is the sum total of estimated spending for dozens of programs, hundreds of individual issues.

And so it's a very complex budget issue that you're hearing today as I think was outlined well by the Director as well as the agenda. One thing to note, the total estimates running will change in May, so typically this item is held open and the Committee usually hears it again after the release of the May revision.

We agree that it is a highly uncertain period in Medi Cal in terms of the challenges in estimating spending. This is something that we covered in our November Fiscal Outlook report. Some of it does relate to the continuous coverage unwinding, which I know is going to be heard in the next issue.

But you know, the Director spoke to a lot of expansions and other developments in the program that in some cases are just very challenging to estimate, and I think that you're seeing some of that materialize. I won't go into too much detail about the current year, you know, changes. I think the Director and the agenda cover that.

Well, one thing we wanted to note, we released an analysis a couple of weeks ago, really taking a detailed look at trends in the senior caseload, which is covered in the agenda at a high level.

We found that over half of the growth in caseload above a pre pandemic trend was driven by eligibility expansions and most of that being the asset test. We also raised some policy issues for consideration that are outlined well in the agenda.

In summary, you know, especially in light of anticipated federal funds changes and what both our office and the Administration project to be shortfalls in the out years in the General Fund.

This item is a good opportunity to examine a lot of these caseload trends and consider the extent to which they continue to reflect the Legislature's priorities for the program. So with that, we're available for questions.

Great. Thank you. And I do have a couple questions. I'll actually start with the Laos, since you're on a roll, and just ask if you could expand on the cash basis for operations and sort of the impacts on cash flow and how that might affect this current situation. I know it's a different way of doing things for California.

It is, I think, fairly unique in the budget, especially for a program of this size. And it does create a lot of volatility in the estimating, as has been noted by the Director.

You know, to give you maybe one hypothetical example, there are times when the state may be anticipating a payment that's going to be made at the end of June. For example, let's say it's $500 million, and that's not an uncommon amount in Medi Cal. And for whatever reason, it may slip into a future fiscal year.

Now, in most programs, that wouldn't necessarily impact budgeting. You know, we would just kind of move on. In medi Cal, however, it would have the effect of reducing spending by $500 million in the current year and increasing spending by $500 million in the budget year, which equates to a $1 billion swing from 1 transaction.

So, I mean, that's just one hypothetical way that that can materialize. It sounds like there are other ways, however, that that cash issues have been kind of materializing and causing the need for the loan request as well as the supplemental appropriations request.

And it's also the case, as the Director noted, that trends in the program can also just be accelerating the need for cash a lot sooner than maybe was anticipated. So hopefully that's helpful.

Yes. Thank you. And then for DHCs, could you talk just a little bit more about the COVID unwinding in this and how that's affecting the situation now?

Definitely. So when we were under the public health emergency, we really eliminated the redetermination process for our Members, wanted to maintain coverage so that individuals can have access to the care they might need without having to do the redetermination process.

We reinstituted, per federal requirements, the normal kind of process of redeterminations, and with that, 17 federal flexibilities to really similarly streamline the redetermination process, because 15 million individuals had to go through that process and wanted to eliminate as many barriers as possible in that process.

And so those kind of those flexibilities have been in place and will be in place until the end of June 2025. And so as we think about what that means for our caseload, when we started the redetermination process, we actually thought that we would go back to our kind of our preference pre pandemic caseload, but we didn't.

We maintain pretty high eligibility and enrollment. We're at just under 15 million Members. Prior to Covid, we were at about 13, 14 million on the for. For enrollment.

And so thinking through what these changes means and how to predict what the enrollment will be in the future has been all part of these conversations and the trending and trying to understand what this means for our caseload in the future.

Great. Thank you. I'll open it up to Members. Assemblymember Bonta,

thank you for bringing this forward. I think one of the challenges that we're facing is the kind of sensationalizing of this, of this additional loan which the Administration has accounted for and is something that is allowable to be able to do.

You've given notice to the Legislature to be able to take out a loan up to the 10% cap that's outlined before, just for the sake of the everyday person who's trying to make sense of that.

My understanding is that three factors, the asset test elimination, the coverage unwinding of the flexibilities, and the unsatisfactory immigration status components, were kind of new programs. Right. For us to be able to look at legislatively. You all budget based on actuals. What kind of information did you have for establishing the actuals?

So as part of the 2024 Budget act, which was passed in June, we had one month of actual information. We had January 2024 when many of these things, things went into effect. So very limited actual information in terms of what that means to the program enrollment and spending.

And so then at Governor's Budget, we had information going back to July, so about 56 more months of actual data to inform our November estimate, which is the Governor's Budget. And now we have basically a whole year of actual information. We have actual information through January 2025, which is informing these forecasts of why we're here today.

We're seeing trends higher than what we, what we budgeted or assumed as part of Budget act and as part of Governor's Budget, all based on actual data. And then kind of thinking through the trends with what that might mean for the rest of the current year and then for the budget year.

That was very helpful for me to understand more deeply. I think we always want to be in a position where we're making projections based on actual data and utilization.

And it sounds like going forward there will be a lot more certainty because we will be able to see this over several months instead of, you know, closer to a year plus as opposed to the one month and, you know, less than six months that you were able to be able to generate the information that we currently had which led to the loan and the additional allocation.

So that was incredibly helpful for me and provides a little bit more certainty to me about what.

And these are unprecedented changes and particularly all happening at the same time. And to be able to isolate. I think the LAO did a really nice job in their seniors Medi Cal caseload of trying to isolate the impact. But that is a difficult process when you don't have a lot of actual information.

And then I just wanted to also put this conversation that we're having within the broader context of what's happening with other states and federally. You mentioned Colorado, Connecticut, Indiana, Maine as states that have also experienced significant cost pressures and additional expense related to Medicaid.

And then you made a statement about us not having currently only having aggregated data around what the specific cost drivers are within our Medi Cal System. Can you give us a flavor of what the other states are indicating are driving some of the medical expenses?

So I don't have specific details. I know just for example, Pennsylvania is about 2.5 billion over what they were anticipating to spend and Indiana about a billion.

And so if you think about kind of, I don't know what their caseloads are or their enrollment is, but compared to California, I can't imagine that, that they're at the 15 million Member mark. And so I think we're learning more, but I think pharmaceuticals have a lot to do with it.

And then just the cost per enrollee in terms of acuity as well.

Right. I think other things that I've heard of are kind of the impact of the type of care. Long term health caseload. Obviously acute care is much more expensive for our growing senior population.

The hospital visits, hospital outpatient upticks as opposed to preventative care, unanticipated demands for home and community based services, and long term supports that are all kind of built into Medi Cal. Those are all important for me just to kind of situate ultimately what are the drivers for the rising cost of health care.

We have to make this point every Single time we can. Would it be helpful for us to not have people experiencing poverty in order to be able to eliminate some of the drivers of our health care costs?

I mean, I think we think about kind of a person's health and well being as all kind of that whole person care and everything that you think about some of the efforts we're doing with Catholic and thinking about how to address some of the social drivers of health that we know, help ensure individuals can really thrive and be supportive in their communities and really recover and have, you know, access to more prevention and more upstream efforts to really prevent hospitalization, prevent institutionalization. And so that is kind of the whole goal of the framework of our program.

Yeah, I think also just from a utilization standpoint, we do a lot of otherizing in our work. Right. I just wanted to give us a sense of who is actually on Medi Cal. Who's receiving Medi Cal. The requirement is that the eligibility is 138% of the federal poverty level.

So for a single person, that means that they're making $21,597 annually. For a family of four, it means that they're making $44,367 annually. These are working people who are not receiving the wages that they need in order to be able to not be on Medi Cal. And we also know that we've tied Medi Cal to our employers.

So many people who are on Medi Cal either experiencing extreme poverty while working and or their employers are not providing insurance, medical insurance, and so they are needing to go on Medi California as everyday working people. We want to be able to make sure that we're providing a thriving wage for us. And I'm sure that that would have an impact on Medi Cal utilization. Would you agree with that?

I would imagine so, yeah.

Thank you for that. And I also just want to point out that also on Medi Cal are our children. Right? Children under 19 may qualify for Medi California if their family income is up to 266% of the FPL. My understanding is that something like for children who are 0 to 5, that there's 51% of our children.

Right. We have about 5 million children on that account.

I just wanted to kind of keep it real in terms of who we're actually talking about as we're thinking about the impacts on overall healthcare costs. And thank you for engaging in that conversation with me. And then lastly, I just wanted to have us get a sense of what the Department can do around the addition mentioned.

Several times. Kind of the additional like rising costs around pharmacy costs. What might we be able to do to deal with some of the utilization pressures related to our pharmacy costs?

So that is something that we are thinking about as part of May revision. You know, the idea of even value based purchasing, that is a model that is used for different high cost drugs. So we are thinking about ways to look at expenditures. What are some of the high cost drugs in their utilization.

And you know, think about where we're at with the Medi Cal RX program and our supplemental rebates. We've increased those significantly over the last year or so. And so it's something that is top of mind for us as we think about options for May revision.

I appreciate that.

Assembly Member Flora.

Thank you, Madam Chair. Thank you. And I do not envy any of you. Trying to balance this all out is not an easy task. Just want to run something by you. I know there's a stakeholder group that is also talking about this as well.

But coming from a rural community and this is in regards to air ambulance services and 24-25 there's, you know, medical is reimbursed around 20% and 25-26 it seems to have gone away because of Prop 35 and then it's getting reinstated in 27.

But there's a gap in the middle and I am very concerned if we don't fill that gap that our constituents will have some issues with that. I mean these are folks that pick our, you know, constituents off when trauma patients, inter facility transfers, I went to pediatric patients as well. So this is a huge concern.

Just curious if any thoughts on that and kind of like filling that gap between this year, next year's budget and then 27 on.

So as you noted, Proposition 35, when it was passed by the Governor's Budget, made all of those rate increases that were part of the 24 Budget act inoperative. At this point, we don't have any proposals for kind of any bridge funding until the 2027 kind of categories of the Proposition 35 expenditures go into effect. And that's where we're at today.

Okay, thank you very much. I look forward to working with you on it because it is important that we kind of figure out a way to keep these folks in service so our communities are safe. Thanks.

And we will go a little bit more in depth into MCO in a next issue coming up. But I appreciate you bringing that up. Assemblymember Patterson.

Great, thank you. I'm not tall enough to reach this microphone. It's the seat. Thank you. Just want to a couple questions and some observations here. I don't really speak for Republicans.

Well, I guess I'm the only one left now in this room, so I'm going to take but you know, I believe Medi Cal is a necessity, you know, as a necessary program in this state. And I want to be I don't think anybody's advocating for eliminating medical helping people that that need the help.

I've been working really hard on bringing more access actually in and around my district to because one of the biggest issues that has been going on for as long as since when I was a staff Member was so 20 years ago is the lack of providers for a whole host of reasons.

And so I've been working pretty hard on that and I think we're making some progress on different types of providers. Just met with Partnership Health Plan on Friday, actually, so really happy with the way those conversations are going.

But one thing I learned recently is there some kind of metric that DHCS has or maybe it's through the Federal Government? Just get some more clarity on how many primary care visits a medi Cal recipient should have a year.

And if you don't know the answer to that off the top of your head...

I don't. A lot of it will probably depend on kind of medical necessity and kind of the experience of the person. But we can follow up with you.

Okay. I was, in whether there's some kind of incentives or disincentives given to the plans on how many appointments an individual should have. The reason why I bring that up is because I've heard different numbers through the years. You know, maybe there's an incentive or a disincentive if a person doesn't go to two primary care visits a year, which I don't know anybody, you know, basically 20 to 40 that goes... Maybe this just is a guy thing, I don't know. But ever go to the primary care unless they have to.

And so I want to make sure we're not disincentivizing, you know, the plans for getting some kind of appointments for people when they need it, even if it's not primary care. So I would love to just know more information on if there are metrics around that.

The other thing that I think you're pretty familiar on, I think I'm on first name basis with majority members of your staff at this point, but as you know, I've been working on for going on three years now to help individuals with developmental disabilities who had private health care, whether it's through basically a non-government program. Although it could be from their, you know, CalPERS or something like that, but a private health plan.

And because of CalAIM and managed care, if they were using, you know, like a wraparound service, a Regional Center, something like that, for one reason or another, they have been losing access to their primary coverage and instead have been forced to go on Medi-Cal. Where in just for the sake of people on this Committee, they know where I'm coming from on that is that there's an individual in my district, for example, that's one of like five people in the entire nation with a particular disability. Had a specialist.

And when Cal Managed Care was rolled over to this segment of the population, they're unable to access that doctor anymore. So I ran legislation last year, worked really hard on it, was amended nine times, and we got it to the Governor's desk. And I had a Democratic joint author on that bill.

It was AB 3156, and I've reintroduced it again this year. And through those negotiations, we asked for for DHCS, there's a Committee that meets. Six months within that Committee to come up with recommendations on how to make sure that this population is able to utilize their primary insurance.

And at the time, the Department did tell us that they couldn't do that in six months because it was originally 12 months, but on the floor we amended it to six months because I felt like two and a half years was enough time for the Department to figure this out.

Now I continuously get back from the Department that... And again, the reason why this is germane to this topic is because these individuals should not be on Medi-Cal. They shouldn't be enrolled in Medi-Cal, taking money from that program that could go to help other people who need Medi-Cal access.

And so what I'm saying is the Department has the ability to fix this on their own. We don't need legislation to do it again. But I'm continuously told by the Department that this is an issue with the provider or it's an issue with the plan or whatever the common denominator.

Somebody reaches out to me once a month on this from all over the state. The common denominator is DHCS. They all have different plans, they all have different providers, and all of them are having the same issue. So I'm just going to ask here in a public, so everybody can hear it. Can DHCS please commit to fixing this issue?

Yes, we can.

All right, thank you. Because I would like to drop my bill because we're only allowed to have 35. And so please figure it out this year. But no, really, just last week a new person reached out, and I just don't know, understand where the hang up is. But it's going to save Medi-Cal money, and so I just want to make sure we can get to that. And the reason why just going to the access because of the limited number of doctors that accept Medi-Cal and providers that accept Medi-Cal.

The more people we have on the Medi-Cal rolls, the less access for people who actually are trying to get into Medi-Cal. So whether that's California voluntarily adding people to the rolls or whether that's for some weird reason I don't fully understand. So I just ask that you work with us on that and please get it done in 2025 goals, please. Thank you.

Thank you, Assembly Member. Any other questions? Assembly Member Schiavo.

Good afternoon. So I have some questions actually about some issues that we haven't discussed yet, but also wanted to make a couple comments and just kind of clarify. I know, I don't think I heard it come up in your comments before, but I think it was mentioned in previous hearings. You know, this, my understanding is that, you know, this is a kind of regular occurrence. The shortfall. Right.

I think the comment by my colleague, Assembly Member Bonta was appropriate in, you know, the kind of sensationalization. But over the last 10 years, about half of those years, we've had to do the same thing where we have a shortfall, we have to loan to get through the end of the year. Is that correct? Or...

I don't know if it's 50% of the time, but it has happened before. And with the program, $190 billion spend, there are in kind of all these unprecedented changes, it is not uncommon. We did this last year as part of the 2024 budget as well.

Okay, thank you. And so I think what was discussed before is, you know, we're talking about, I think depending on if you're talking about our current shortfall or what gets us through the end of the year, it's, you know, around 2 billion, a little over 3 billion.

But versus an $880 billion cut, federal cut to Medicaid or Medi-Cal in California, that is threatened. And if that goes through, you know, as I think, are we the largest? Largest receiver of Medi-Cal, our dollars that go to pay for it in other states, we believe should be coming back to us.

But that kind of a shortfall, this is something that's solvable. Right. This is something that we solve on a regular basis. And we should because the things that you're talking about means that we have been successful. We have been successful about keeping people covered, about making sure that they have access to health care, making it through a pandemic and keeping people safe and not kicking them off health care in the middle of a pandemic. That's what we should be doing. We've been doing what we should be doing.

We have been keeping people who are seniors and disabled folks from having to reapply. And as we have found, it sounds like a whole waste of money that we're doing that because we're not finding that people's economic situation has changed significantly. They're still disabled and have a hard time getting work. Still seniors probably not working a whole lot. And so the idea that this is a huge problem, this is a problem that we should want to have, truly, because we should want to be making sure that more people have healthcare.

I think the problem, which also Assembly Member Bonta mentioned a little bit, one in five working adults in California are enrolled in Medi-Cal. So there's a lot of employers who are relying on this as well. Who we are subsidizing, really, at the end of the day. Some huge corporations, some of the biggest corporations in our country, we are subsidizing their workers.

And that is another area, you know, that certainly we could look at, because obviously places like Walmart could afford to pay for health care for their staff if they wanted to, and the California taxpayers continue to subsidize them. But, you know, this shortfall, like I said, is solvable, but the $880 billion cut that is threatened at the national level is not solvable. I think what was said at the last meeting is that we cannot backfill that cut. Is that correct?

That's correct.

That's correct. So, you know, I think, while we have to certainly step up and make sure we figure out this, we also have to step up on the federal level and make sure that we are pushing very hard to ensure that all of those dollars that we have paid to the federal government to cover our health care come back to us.

And we're happy to continue to share with other states, but we want to get our federal dollars back, our state tax dollars that we've paid to the federal government back to us. So on a couple other topics, if I may, because that's not the only issue in Medi-Cal. We, one of the things that I have requested and have been working on is around the Medi-Cal share of cost implementation and wondered if you could provide a quick update on that.

Due to the budget deficit, it was not included in the budget, which we were hoping for and expecting, and that the current, you know, maintenance level for the current program is $600 less than half of the federal poverty level, which has not changed since 1989. So, you know, we're, we're talking about poorer than poor folks. And we, we're still not making up that difference. And so can you share a little bit of an update about where that's at?

So, as you noted, it wasn't funded as part of the last Budget Act. And so at this point, we are not moving forward with that proposal.

And is there any plan to figure out how we do do that?

I think given the state's fiscal situation, not sure that there's a path immediately, but recognize the importance of the item.

There's definitely great need. You know, another couple things. I've been meeting with hospitals quite a bit lately because, in addition to sitting on this Committee, I also sit on Health, on Health Assembly Health Committee. And one of the things that was raised by Children's Hospital in LA County is that there's sometimes 2 and 3 year delays in funding from Medi-Cal, from the federal Medi-Cal program. Is this standard? This actually surprised me.

I've been on Health Committee and I haven't heard about this and did not realize how long it can take. And so essentially these... It's caused a huge problem for Children's Hospital because it impacted their cash flow. They've been having to float that money for years, and to the point that it actually impacted their, their credit rating, and which is further impacting their cash flow because now they have a lower credit rating. Can you, is that a, like how do we push at the federal level to steer that?

So that particular concern that you're raising from Children's Hospital Los Angeles, and we work closely with them on it, is regarding the hospital quality assurance fee and the payments regarding. It's not all Medi-Cal funding. It's a very kind of the directed payments as a result. And we are working on shortening the timeline. I believe it's 15 months we have for reconciliation now, shortening it to nine months to help speed those dollars to the hospital. So that will go into effect, I believe, this program year.

Okay. Okay. And then, you know, I also chair Military and Veteran Affairs Committee. And healthcare can sometimes be an issue of national security I am finding out. When I met with Ridgecrest Hospital at China Lake Basin next to the Navy base there, which is really, it's out in the desert, not a whole lot around there.

It's two hours to go to another hospital. They already had the maternity ward shut down and then were able to reopen it with the help of some funding from the Navy. The state has stepped up, there's been all of this work to kind of, you know, prop up and support this hospital that provides critical health care.

And we know this is true in lots of rural communities. Right. They heavily depend on Medi-Cal funding. And so it's not only the impacts on the individuals if Medi-Cal funding is cut, but when hospitals have 30, 40, 50, sometimes 60% of their funding is Medi-Cal funding.

We're talking about hospitals closing, you know, a lot of hospitals that are kind of on the edge right now already. And so this doesn't just mean that people with Medi-Cal won't have health care. It means that everyone in that community will not have health care.

And in this case we're talking about a lot of non-military staff who are PhDs and creating their own rocket fuels. Like amazing, incredible critical work to our national security. But if they can't take their kids to the hospital or they can't go to the hospital to have a baby, they are not going to be able to stay in that community.

And so, you know, these are really areas where I think we need to figure out contingency plans and ways to make sure that, you know, hospitals that are critical to our national security, to our safety, that we are able to support them while we're going through rough times at this moment.

And I hope that that will be a consideration for the Administration and figuring out, you know, how we do that, encouraging the Navy to step up again, because I think this is a great opportunity for our Navy to step up and support the local hospital that's providing care to not only to the base and many people on that base. So I just wanted to flag that as a major concern that we have for some of our rural communities.

And I will note as part of our 2025 program year hospital quality assurance fee, we are increasing payments to private hospitals by 6 billion. And so those dollars will come, you know, they're not going to come starting January 1st, but will be effective January 1st. And so those dollars will be in addition to the current funding that we have for our program. So with the intent to serve some of the critical access needs that we have in in our communities.

I would love if you can meet directly with Ridgecrest Hospital and talk with them about how that could help them. Thank you.

Any other questions from the Committee? Okay. If not, we will turn to public comments. So we'll open this issue to public comment that Is directed towards DHCS and the Medi-Cal program. And if you could keep your comment to 30 seconds or under, and we do have a gentle timer for you.

And as people are coming up, I'll remind you, if you're speaking on a previously stated position, out of respect for others in the room and waiting out in the hallway and everyone's time today, if you could please just provide your name, your organization, and your me too position.

Sure. Christine Smith with Health Access California. Health Access supports maintaining funding for Medi-Cal programs and urges legislators to continue their commitments for all communities, including to the Health4All expansions. Because in California, we recognize that our health system is stronger when everyone is included. As noted, rising healthcare costs are a challenge across the country.

This is not a unique issue to California, which is why Health Access is working to support the Office of Healthcare Affordability's cost containment goals. This expansion benefits not just individuals who work, pay taxes, and contribute to our economy, but also their families. Thank you.

My name is Monica Madrid. I am a state policy advocate with the Coalition for Humane Immigrant Rights, also known as CHIRLA. And we urge legislators to continue their commitment to Medi-Cal funding, including the expansion to undocumented individuals. Undocumented individuals help fund the social services that they are often excluded from. In 2022, undocumented immigrants paid about $8.5 billion in state taxes. In the face of significant federal threats, we must ensure the families and communities who have come to rely on our safety net can continue to do so. Thank you.

Thank you, Madam Chair and Members. Cathy Senderling-McDonald representing the California Association for Adult Day Services. The CBAS programs, the Community Based Adult Services programs are mentioned in item one as well as in item five today. And the request from the CBAS providers is for a rate increase this year. We're in desperate need.

As is noted in item one, the idea of being able to keep people out of more costly long term care facilities by providing community based services like CBAS programs do is really helpful to our bottom line. But it's more than that. It's incredibly important for the individuals themselves to maintain that life and also for their caregivers. We urge you to keep them in mind as you build the budget. Thank you so much.

Good afternoon. Linda Nguy with Western Center on Law and Poverty. We appreciate the leadership and Administration's leadership in removing Medi-Cal exclusions so that now all income eligible Californians, regardless of age, assets, or immigration status are eligible for Medi-Cal.

The higher caseload is a reflection of the expansion, success, and means more families now have access to needed health care services. Without Medi-Cal, families are forced to make difficult decisions of whether to seek care, pay rent, or incur medical debt.

Even though we've removed these exclusions, there are seniors and persons with disabilities just above the free Medi-Cal limit who are expected to live off of $600 a month. And so we share Assembly Member Schiavo's request to reform the share of cost program. And finally, we appreciate the analysis questions regarding the impact of capitation rate increases on budget growth, especially as utilization actually declined during the pandemic and plans were provided additional Covid funding. Thank you.

And just a gentle reminder if we could keep it to 30 seconds.

Good afternoon, Members and Chair. Beth Malinowski with SEIU California. I want to acknowledge the conversation regarding last week's loan and what it signals about the overall financial health and stability of our program. You know, I think everyone here agrees, or many of us at least, that when everyone is covered, we all benefit.

And certainly, when we look at understanding the cost drivers, I really don't appreciate the comments made up here today, Assembly Member Bonta and Schiavo, that really get at some of the upstream factors we have to be taking into consideration as well. We need to be looking at poverty. We need to be understanding more how corporations are quite likely taking advantage of our Medicaid program today.

Whole industries where over 30% of employees are on this program right now. And how do we address this challenge? When we think about this, we of course want to make sure that we are holding employers accountable for caring for their workforce. It should not be on our Medi-Cal program alone to get that done. I provided today some charts that highlight which industries are taking greatest advantage of the Medi-Cal program today.

Additionally, and it was referenced already on the dais, but I want to second it. The conversation of course taking place right now in the context of this much broader federal fight. We're there with our Fight for Our Health Coalition to make sure doing everything we can to make sure we are maintaining the funding this program needs. And also shared with everyone today the letters that reflect our second letters to Congress about that challenge. Thank you.

Hi, Good afternoon. Chloe Hermosillo with the California Immigrant Policy Center. CIPC supports maintaining funding for Medi Cal and we urge Legislature to uphold their commitment to prioritizing the health of all Californians regardless of immigration status.

Over the past decade, thanks to advocates, the Legislature and the Governor, California has committed to making our medical system more equitable. This has allowed our immigrant communities to have access to more preventative care that reduce costly emergency room visits. As we face attacks from the Federal Government.

California needs to be a beacon of strength and uphold our commitment to the health care access of our of our most vulnerable communities. Our public health economy and state are stronger when everyone is covered. Thank you.

Nora Angela's with Children Now. We support maintaining funding for Medi Cal Programs and urge legislators to continue these. Essential commitments including to the Health for all Expansions. Our health system is stronger when everyone is included. Especially in the face of significant federal threats. We must ensure the families and communities who have come to rely on our safety net can continue to do so. Thank you.

Good afternoon, Chair Board Members. This is Jhonny Pineda with the Latino Coalition for Healthy California. LCHC supports maintaining funding for medical programs including pay rate increases for all the promotoras De salude and community health workers as well. And also expanding food for all and also securing coverage for all undocumented individuals as well.

We urge your support, you know, for our low income communities and communities of color. Thank you so much.

Thank you. Chair Members. Chris Zgraggen with Capital Advocacy on behalf of Children's Choice pediatric dental care. I'll be quick. We are requesting that the Legislature maintain funding for pediatric Medi Cal dental. Children's Choice sees about 382,000 visits per year, 86% of which are children on Medi Cal.

So needless to say, any cuts to pediatric nurses dentistry would be devastating. Thank you very much. Bye bye.

Good afternoon. Omar Altamimi with the California Pan Ethnic health network or CPEN. CPEN strongly supports the H4AMedi Cal expansion and it's unfair to blame our state's immigrant population for Medi Cal's increasing costs. There are a lot of reasons for this. Prescription drug costs are high. Prop 35 diverts future MEDI Cal funding.

That could have been used to stabilize Medi Cal generally directly to providers. California's population is aging and senior care costs more, which is also impacting costs. The Asset Test Elimination Federal flexibilities. We also successfully expanded Medi Cal for the undocumented and enrollment has been higher than expected but should not be used as a scapegoat for fiscal concerns.

We shouldn't be blaming coverage for people. When Prop 35 completely blows up Medical's budget and handcuffs legislators from the flexibility. They previously had to meet the budgetary needs of the program. Thank you.

Good afternoon. Thank you Madam Chair and Members. Yasmeen Peled with Justice in Aging. I just want to express our strong support for the recent expansions of Medi Cal for those with unsatisfactory immigration requirements. Also elimination of the asset test and other expansions to Medical specifically on the senior caseload. I'd like to point out that this is not a negative. This isn't a bad thing. There were many, many, many low income seniors here in California that were unable to access the Medi Cal program for. A variety of mainly bureaucratic reasons. And so the full elimination of the asset test provides them the needed health care that they need.

And so this should not be the growing caseload and the rising number of older adults in California should not be a reason to cut back their health care. If anything, we need to be expanding their access to healthcare like Assemblymember Chiavo's. Budget request on implementing the Medi Cal share of cost reform. Thank you.

Thank you very much. Vanessa Cajina on behalf of the California Academy of Family Physicians here in support of recent medical expansions based on population status. Very grateful to the Legislature and hope that we can maintain these expansions moving forward.

Seeing no more public comment, we're going to move on to issue two, Family health estimates and various budget issues. The background for this item is on page eight of the Agenda.

And on this item we are asking the Department to provide an overview of the family health programs and their estimates and an update on 3 items identified on the agenda the California Children's Services funding methodology, the Continuous Coverage Unwinding and the Naloxone Distribution project budget proposal and so welcome. Please start when you're ready.

So I will provide an overview of the Family Health Estimate. Uh, changes to the November 2024 Family Health Estimate. So for the current year the estimate projects 269.6 million total funds, 238 million General Fund for the state only componen components of the California Children's Services Genetically. Handicapped Persons Program and Every Woman Counts Program.

I will now turn it over to Susan Philip, our Deputy Director for Healthcare Deliveries to talk about children's services.

This represents a minor decrease of about. 6.7 million total funds. This decrease is primarily driven by reduced claims in the Every Woman Counts program as more Members are now able to access services through Medi Cal after the 26 to 49 expansion. For budget year, the estimate projects 272 million total funds. 241.4 million General Fund. So virtually flat Compared to the revised current year projections.

Thank you very much. I'm Susan Philipp, Deputy Director for Healthcare Delivery Systems at the Department of Healthcare Services. Thank you for having me. Briefly, about the California Children's Services.

It's a program which provides diagnostic and treatment services, case management, and physical and occupational therapy services to children under age 21 with eligible serious medical conditions such as: cystic fibrosis, Hemophilia, cerebral palsy, and more. CCS administered in partnership with county health departments and DHCs.

Senate Bill 586, which was chaptered back in 2016, authored DHCs to establish the Whole Child Model Program in designated counties. The Whole Child Model Program incorporated CCS covered services into Medi Cal managed care plans to streamline children and families experience as they navigate Medi Cal and CCS covered services.

There are currently 33 counties that have Medi Cal managed care plans administering Whole Child Model Program. The CCS budget allocations are intended to reflect the county's historical expenditures and caseload. For this current fiscal year the county's allocations are based on first, each county's average expenditures.

So we looked at expenditures during the previous four fiscal years based on information provided by the counties and secondly, the allocations are based on each county's average caseload. So this is a change from previous years. Previously, DHCS would use average annual caseload and staffing standards to determine each county's maximum scope staffing levels.

That previous methodology resulted in uneven budget allocations to more populous counties with larger staffing levels, even if their expenditures were disproportionately lower when compared with other counties. So essentially larger counties were getting most of the CCS funding allocation even though their expenditures were often lower than their budget allocations.

DHCS has been consistently engaging with stakeholders over the last couple of years on CCS budget and county allocation methodology. DHCS engages in monthly meetings with the County Health Executive Associations of California or CHIAC, and then we also engage routinely with our WIC county partners.

I did want to note that DHCS is looking at options that provide counties with more flexibility and how their total funds can be used across funding categories. We've also been working actively with CHIAC and the counties to address other challenges as they have identified. For example, we're working to develop standard trainings for CCS monitoring and oversight.

Just briefly, about CCS Monitoring and Oversight Program. CCS monitoring and oversight were established through Calaim and that was authorized in statute back in 2021. The goal of the initiative is to support monitoring of counties and help ensure that our CCS children have timely access to quality care under the CCS program.

So under that process we implemented a very robust stakeholdering process that started back in January 2022 with a work group, and through that whole process we developed a MOU a memorandum understanding with associated monitoring protocols that was released back in June of 2024.

I will note that DHCS previously had pushed back the implementation date for the CCS M&O program as we call the Monitoring and Oversight program, from January 1/2024 then to July 1/2024 and now it is to go live July 1/2025. And that was all based on feedback that we had heard from the counties.

DHCS has also provided counties with annual funding allocated for county CCS monitoring administrative functions in the 24/25 fiscal year budget about $10 million. And this is really to Fund readiness activities such as developing grievances process and other activities to prepare to really implement CCS monitoring and oversight.

To date, six counties have signed the MOU, and DHCS is committed to working with counties as needed.

Is there anything else from DOF or the LAO?

Lizbeth Castillo with the Department of Finance. Nothing to add.

Ryan Miller LAO, nothing to add but available for questions.

Great. And two jobs. Very much appreciate your testimony. I did want to ask if you can talk about the, and maybe you did, and I just wasn't listening. The rationale for reducing funding for overdose prevention and harm reduction. Do I have the right?

Lizbeth Castillo with the Department of Finance I can cover the OPH Settlement Fund.

Yes.

So Governor's Budget includes an augmentation of 8.3 million OPH Settlement Fund in 25/26 to support the naloxone distribution project. And this is administered by the Department of Healthcare Services. And overall the Governor's Budget maintains 41.7 OPH Settlement Fund in 24/25 and includes 31.4 million OPH Settlement Fund in 25/26 to support the Naloxone distribution project.

The additional funding will support the state in purchasing additional Naloxone and distribute it to communities in need of the medication.

Got it. Thank you. Any other.

And Chair, if I may add Chair of Department of Finance. To answer your question, the reduction is based on updated we received updated opioid settlement fund revenues and so during the Governor's budget may revision based on these revenues, we reevaluate update the proposed Opioid Settlement Fund Expenditure Plan.

So that's because the Naloxone Distribution Project is an administration priority. We reevaluated the expenditure plan to provide this funding for the NDP.

Got it. Thank you. And I know there's additional.

Thank you. I have a question first, just on the oversight issues related to ccs. My understanding this is an absolutely critical program. It allows us to be able to ensure that we're providing specialty care for our most vulnerable children.

And it's not lost on me that we put a lot of burden on our counties to be able to fully implement our different health programs. I wanted to just speak specifically to the CCS monitoring and oversight program you referenced coming forward in 2021. There have been a lot of challenges with implementation for a very necessary program.

I know that you all are in conversation with CHIAC about this, but just to kind of lay out some of the concerns, delays in service authorization requests submitted to DHS, low reimbursement rates for physicians to participate fully in medical therapy, lack of guidance and training for consistent use of the state CMS net system, shortages of physical therapy and occupational therapy providers, challenges with securing space and equipment for SELPAs for the county CSS Medical Therapy Services.

These are all very real issues that require a lot of significant technical assistance and response from DHCS. So I'm wondering how we move into a technical assistance and capacity building approach with our counties before asking them to do something and Fund without fully funding their ability to do so.

My understanding is that time and time again counties continue to put forward their budgets to be able to fully support the capacity needed to be able to do these programs, but often are not provided the sufficient funds to be able to do so.

So it feels a little bit like a situation where we are asking counties to do a lot. We're not. They put forward the need to be able to have the funding to be able to. To meet the monitoring requirements. And then we're not giving them that funding. But then we're increasing oversight without the step of ensuring that we're truly addressing some of their capacity building and technical assistance issues.

Can you share with us how you are going to at least moving forward, really address some of the technical assistance and stakeholder feedback that you've gotten so that we can have better Administration?

Thank you so much for that question. So we have provided through the fiscal year 24/25, about $10 million to really support the M&O activities. We also do recognize that there is a Need for the technical assistance. We have committed to the counties that we're working on a training program that we will be rolling out.

So that is also an area that we're looking into to really develop a training. We've produced at the Department a full provider manual that is really kind of a toolkit, if you will, for all the different components of what would be under the umbrella of the monitoring and oversight program.

Everything from grievances and appeals to really looking at the reporting requirements. And this is really the spirit is truly to build capacity and to support the counties. The monitoring and oversight program really helps the Department, as well as the counties, have visibility into how we're providing services to our CCS children.

I think it's tough, though, when you say monitoring and oversight and then don't provide the necessary funding for them to actually meet those requirements.

So is there any plan to be able to perhaps stage the technical assistance in a way that would allow us to at least understand whether or not they have the ability to fully be responsive to the oversight requirements that you are outlining for them?

I will just point out that a number of the requirements are not new. These are requirements that the counties are, you know, have been in place for quite some time. The only component that might be considered new is a Grievances Monitoring Program.

So, you know, if a phase family or a child provides a complaint, want to be able to track that and provide some information. So that's really the new component of the MOU, if you will. But really everything that's in the MOU just is a codification of existing requirements.

Have you done anything specific to truly understand the administrative and overhead costs associated with the compliance that you are requiring and whether or not in the application of for funding, whether or not you are fully funding the compliance components?

I think we've requested information from the counties, and that's something that we can continue to work with them on on the specific details. Every county is, of course, very different in terms of how they administer. So we'll continue to work with them to get additional information on the details of the Administration.

I think that's a soft no that I would just like to point out that oversight is incredibly important. We want our dollars to be going to the places that we need to. We also want to be able to support our counties to be able to fully administer these programs that we move forward with.

And my preference would be that we move toward the ideal of providing technical assistance and removing some of the barriers for them to be able to fully execute with Fidelity to the programs that the Legislature provides, you know, an allocation of resources to be able to do so.

So I'm fully hoping that moving forward we can be more thoughtful and strategic about the demands that we're placing on our counties while we're asking them to administer these programs.

Thanks. I did have another question about the CO-free funding.

Thank you for that comment.

I am a little concerned about the fact that we have these very helpful overdose prevention and harm reduction programs that we know have been effective.

And we are essentially kind of defunding some of the aspects related to those harm reduction programs, including Syringe Exchange Programs, and essentially kind of substituting that out with a strategy that's particularly focused just on naloxone distribution.

We know that that is one aspect of being able to limit the overdose deaths that we experience, particularly in light of what is happening with the Fentanyl Crisis. But I'm worried that they're coming at the expense expense of known effective harm reduction programs.

So can you speak to this like literally the same amount of money I think, is being taken away from the Harm Reduction Programs and has been put into the naloxone distribution? Are we just having a different kind of theory of the case around what would be the most successful to prevent substance abuse and overdose?

Yeah. Lizbeth Casio with Department of Finance. We would like to note that part of the Opioid Settlement Funding goes directly to cities and counties and the Department of Healthcare Services' most recent Opioid Settlement Fund Annual Expenditure Report indicates that a majority of this funding is expended on harm reduction efforts.

And for these reasons, the administration's proposal prioritizes the provision of free Naloxone. Additionally, Governor's Budget maintains approximately 15 million in the current year for the harm reduction project or program, and it also includes 5 million in the budget year to support the harm reduction initiative.

So just to be clear, there's not supplanting that's happening. We're not robbing Peter to pay Paul.

It's a reevaluation of Opioid Settlement Funds. And due to this reevaluation of the revenues, the Administration has reevaluated the Opioid Settlement Fund Expenditure Plan and has determined that the Naloxone Distribution Project is an administration priority.

So in plain speak, we are prioritizing Naloxone distribution over other aspects of the COFRI program around harm reduction. Polypanish in real plain speak, I really. We have a lot of people whose lives are depending on being able to have the funding and support that they need to for prevention services, frontline services, harm reduction programming on the whole.

And I always get a little concerned when we use a lot of language here that is not accessible to the people who are supporting and promoting those programs. And if we're making a policy decision and a switch, we should just be transparent and open about that. So in the most kind of accessible way possible. Can you explain what's happening here?

Yeah, I don't think that the Administration, I don't think, would characterize in that way funding for the Naloxone Distribution Program. Funding for the provision of Naloxone is an Administration priority.

And like my colleague had mentioned, because there is a separate opioid settlement funding source that goes directly to cities and counties that are spent on harm reduction efforts, the Administration reevaluated the expenditure plan and decided that to increase the funding for the Naloxone Distribution Project by that same amount.

So again, this is just, this is a starting point for conversation. We'd be happy to work with the Legislature on continuing to refine this proposal.

I would appreciate that. Otherwise, I'm going to have to revert to doing a very odd thing which is agreeing with my colleague Mr. Patterson on what we are, why we are prioritizing a particular thing over more broadly based and known to be very effective harm reduction initiative.

That's it for me.

Assembly member Shiver so I know that at the February 24 hearing, the Administration explained that the declining OSF revenues are due to in part, the pharmaceutical companies undergoing restructuring. Can you clarify a little bit? Are these legal maneuvers that companies are doing to avoid payments? Are there any actions that we can take to address that?

Has there been research in that area to see what can be done?

Yeah. Elizabeth Cassio with the Department of Finance. So the opioid settlement Fund receives revenues from over a dozen settlement agreements. Two of these to date have been effectuated within bankruptcy.

It is our understanding that when companies undergo restructuring or and or bankruptcy, this is a process and it is a process in which the state is an active participant. And so they are able to negotiate and negotiate updated amount and this amount is then presented in bankruptcy court and they are able to come to an agreement.

Do you have a sense of what percentage of the total we have been getting out of those negotiated amounts in bankruptcy?

Once the amounts were agreed upon since they were effectuated in bankruptcy, those determined amounts. It's whatever set amount was agreed upon is going to be transferred over to the OPH Settlement Fund.

I understand that. I guess what I'm saying is if pre-bankruptcy, for example, you owe $1.0 million, let's say, and then you go through bankruptcy and the negotiated amount is $250,000, it's like a 75% decrease. Right.

Do you have a sense of what, how much, how much we're getting at the end of the day through these bankruptcy processes and how much we're losing? I guess more importantly. Right. That we should be getting into these funds?

Yeah, I can add to that. So from the most recent payment schedule estimate from November 2024, this comes from the Department of Justice that tracks the settlements. It reflects approximately 14 million funds from the Endo bankruptcy and 13 million funds from the Malindrak for state directed purposes.

But I would like to note that the decrease that we're seeing year to year in OSF is primarily a result of these payment schedules. So when all of the opioid settlements involve payments over time according to specific payment schedules, and many of them were front loaded.

And additionally, companies also have the option to prepay future obligations, which have done. And so the decrease that we're seeing from year to year, the primary factors, is because of the front loading and the prepayment of future obligations. But, the bankruptcies have contributed to the decrease, but it wouldn't be the main contributing factor from year to year.

So if that's the case, then do we have, do we know when it all ends? When does it all dry up?

Yeah. So according to the November payment estimate, which again may change if there's additional opioid settlement funds, it's just an estimate. We're estimating that approximate the state will receive approximately 750 million for state directed purposes, and that's through 2039. So that is, as I mentioned, the, the scheduled payments. We receive scheduled payments from year to year.

And which companies have filed for bankruptcy.

And so that's the total payments that works, that the state is expecting to receive in OSF

It is Endo and Malindra.

Okay, and so since these dollars are front loaded, how much do you estimate we have kind of left.

To clarify. Is your question specifically on those bankruptcies or?

No, sorry. The total amount that you expect to come in by 20. Did you say 39?

Yeah. So the state has received over 300 million in opioid settlement funds. And as I mentioned, we're estimating to receive approximately 750 million through 2039. But again, that's an estimate and it can vary. And so the Department of Justice provides us with these updated revenue estimates whenever there's a change in opioid settlement funding comes in.

And the ones that filed bankruptcy, do we know, have they opened up with a similar leadership and another name or is this, is it kind of can we expect this as a bad faith move to avoid responsibility or is there something else going on? You don't hear pharma companies like shutting down a whole lot.

Yeah, that we don't have that information in front of us but would be happy to work with our partners at the Department of Justice that does track these settlements and do participate in these negotiations to answer that question. Thank you Assemblymember Patterson.

Thank you. What were those companies again? Endo and who else?

It's Endo and Malinkra. I apologize, I might not be saying it correctly.

That's right. Does the State of California, to your knowledge, do business with either of those companies?

That I don't know. But again I'd be happy to work with our Department of Justice that oversees these settlements to see if we can answer your question.

Yes, I would definitely like to know if California, I would assume likely through DHCS, given it's, you know, in that space, does business with either of those companies.

And I'm just going to advocate again like I did last week, that you know, California is currently in a contract with a company to distribute Naloxone through the CalRX program, Amnio Pharmaceutical, that had just days later settled 280, $273 million settlements for fueling for settling claims that said it fueled the opioid epidemic and I just think that's reprehensible and we should end that contract as well.

So I have legislation to do just that. But I would like to know about these two companies in particular.

Thank you Assemblymember Banta.

I just have a follow up conversation to Assemblymember Chiavos and in part Assembly Member Patterson's question. These, these opioid settlement funds that California fought to have were the result of people dying, of people overdosing, of people getting hooked on opioids that destroyed their lives, their family's lives and our communities sustenance and the fabric of our community. In many ways they're hard fought dollars on the residents and people of the State of California.

I'm a little dismayed by the lack of accurate and specific information about the full amount of the opioid settlement dollars that should be coming to the State of California, to the people of California and how much of that funding is still yet to be spent, the conditions under which these corporations have gotten out of fully repaying the residents and the community Members of California and what we are doing with that.

That should be very transparent and explicit information that we should be able to have. And I'm dismayed that we haven't been able to get that level of specificity during this first conversation. I'm very much hoping that we can have more specificity about that as we move forward in our budget process.

Anything else from the Committee? I think I'll just reiterate, you know, we had this hearing a couple weeks ago and numerous people came out to speak on the issue of harm reduction.

And obviously you've heard some things on the dais today around concerns in terms of, I think in plain speak, as just shifting funds from one program to another program.

I suspect you're going to hear quite a bit of public comment on this issue and quite a bit of public comment in terms of concern around the harm reduction and the shifting on funds to simply a reactive approach to this.

And so I just would really urge you to come back with a renewed perspective, I think, on this particular issue of harm reduction and the shifting of funds and really listen in to the public comment that is about to come and take that seriously as well as take the comments up here seriously.

So with that, we will open to public comment. And if you could please make sure your comments are directed to family health programs, to the continuous coverage unwinding, or to programs related to the opioid settlement fund.

And if you could keep your comments to 30 seconds or less, and if you're a me too, if you could just provide your name, organization, and position. Welcome.

Good afternoon, Chair and Members. Jack Anderson with CHEAC representing our local health departments throughout the state. I just wanted to follow up on the discussion around the CCS program and appreciate the robust discussion among Members this afternoon.

We do want to note that the CCS program allocations were capped approximately 10 to 15 years ago, which has resulted in a process where DHCS has created an alternative sort of fiscal process that's not in alignment with statute, where budgets are proportionally reduced based on the statewide staffing. Excuse me, the statewide figure that DHCS projects.

So counties say they need $200 based on DHCS staffing standards. DHCS comes back and says we only have $100, so everyone has to proportionately reduce their budgets.

You know, I do want to note that we don't have issues with the, with the staffing standards themselves, but we do have concerns about the lack of funding that's invested into the core program.

The $10 million for the monitoring and oversight initiative is intended to support new activities as part of the new initiative, but it does not address the core program funding issues that we've raised today and that were discussed today. Specifically, county programs are underfunded by approximately $115 million in 24-25 based on DHCS staffing standards.

We have been raising these concerns for many years and have appreciated the engagement with DHCS but counties have attempted to modify the monitoring oversight MOUs to tie implementation to funding sufficiency but unfortunately DHCS has rejected those, those proposed modifications. We appreciate the support including the technical assistance and the capacity building.

However, this does not address the core underfunding of the CCS program itself. So CHEAC respectfully requests a delay, an indefinite delay in the CCS monitoring and oversight initiative to address the core program issues that were that were covered today.

And you know, seeing that only about six counties have executed their MOUs, we are hard-pressed to see that additional counties will sign these MOUs based on some of these long-standing challenges. So thank you very much.

Good afternoon Chair and Members. Beth Malinowski SEIU California I'll make this quick. On behalf of our public county workforce we represent wanted to second the comments made by my colleagues at CHEAC regarding CCS monitoring oversight. Thank you.

Hi, my name is Sarah Whipple. I'm a Co-director at the Yuba Harm Reduction Collective. We're a COPHRI-funded program and the only harm reduction program serving Nevada County, California. When we started in 2020 as a volunteer operation, Nevada County had the highest rate of fatal overdose in the state.

In rural communities, ambulance wait times can be very long and having naloxone on hand when an overdose occurs makes all the difference on whether that person survives. More doses of naloxone on the shelves of NDP wouldn't have helped our community.

It was COPHRI funding that allowed us to hire outreach workers and delivery drivers to get thousands of doses of Naloxone into the because of that funding, our communities over so many overdoses that Nevada County is no longer first or even in the top 10 counties for fatal overdose in the state. This funding saves lives.

I know that firsthand because it saved my life. When I was 23, I overdosed on Fentanyl. Sorry, it's hard to talk about this.

We appreciate you.

Thank you. But I survived.

I'm standing here today because a COPHRI-funded program had given my friend free Naloxone and taught him how to use it and he used it to save my life. My story is not unique. Since 2018, Californians have saved 190,000 lives using naloxone they received from harm reduction programs.

Please vote to continue COPHRI funding and allow harm reduction programs to continue saving lives. Thank you.

My name is Laura Thomas. I'm with the San Francisco AIDS Foundation. We are a grant recipient of COPHRI funds and I want to thank you all for your attention to this and to the opioid Settlement funds.

I think you were given some somewhat misleading information by Department of Finance regarding the money that is going to the cities and counties. The vast majority of that money in the last report from DHCS is unspent.

And when they say that the money is being spent on harm reduction, much of that is actually going to the purchase of naloxone by the counties. So very little if any of that money is actually going to our syringe access and harm reduction programs on the ground. If it were, we wouldn't be in this situation.

But as of this point, the California Overdose Prevention and Harm Reduction Initiative is funding 55 programs around the state that are doing the hard work day in day out of saving lives of people. Connecting them to services, connecting them to treatment, connecting them to HIV, hepatitis C testing and treatment.

I know because that is what our program does in San Francisco. So thank you very much for your ongoing attention to this and thank you for asking questions about the program. Thank you.

Just a gentle reminder of our 30-second time limit because there's dozens of people that also want to tell their very important stories.

Great. Elle Chen on behalf of Drug Policy Alliance echoing the concerns of the Committee and reverting $8.4 million back to the COPHRI program for the naloxone distribution program. Syringe service and harm reduction programs account for 57% of overdose reversals as per DHCS data. Syringe service programs and supported by DHCS with naloxone in training.

But they also provide overdose prevention services, treatment navigation, HIV and hepatitis screening, and much more. Proposed cuts jeopardize forthcoming technical assistance to programs led by and targeted towards communities of color. As such, Drug Policy Alliance requests the 8.4 million to be returned to COPHRI. Thank you.

Good afternoon. Whitney Francis with the Western Center on Law and Poverty. Recent investments in MediCal have significantly reduced California's uninsured rate. However, the administration's projected $1.1 billion savings from ending unwinding flexibilities will terminate coverage for 450,000 low-income Californians not because they're ineligible, but due to paperwork barriers.

Most who lose coverage will re-enroll later, often with higher health care costs due to pent-up demand straining families and county systems, making this a false savings. This disproportionately impacts people who speak Spanish as their primary language, seniors, and those with disabilities. We urge the permanent extension of unwinding flexibilities to prevent avoidable disruptions to coverage and uphold the state's commitment to health equity.

Thank you.

Kelly Brooks here on behalf of on two items. First, on the medical unwinding I'm here on behalf of the County Welfare Directors Association. CWDA is working with counties to discuss the impact of the proposed ending of the waivers.

We would highlight the benefits of these waivers that have provided both to beneficiaries and to counties and are supportive of any efforts by the Legislature to assess whether they should be continued. Second, I'm here on the CCS item on behalf of Santa Cruz and Ventura Counties.

In Santa Cruz they were allocated half of what their actual costs were for delivering CCS services in 24-25, Ventura County was allocated 58% of their actual costs and their caseworkers have 600 cases. So we would align our comments with CHEAC. Thank you.

Hi, Christine Smith with Health Access California joining with our colleagues from Western Center to urge the permanent extension of unwinding flexibilities to prioritize and protect health coverage of millions of low-income Californians. And also we also support investments in community health workers and promotores which I believe another organization will also speak about. Thank you so much.

Nicole Wordleman on behalf of the Children's Partnership echoing the Western Center on Law and Poverty's urging you to make the the MediCal flexibilities permanent in order to continue protecting people.

Chair and Members, Kathy Mossburg on behalf just on two issues, on behalf of the First Five Association, want to echo our colleagues on the unwinding and how important that continuous eligibility was for those families, particularly for first five. What we saw with kids zero to five incredibly important to keep them in care.

And then want to associate our comments on behalf of the San Francisco, I'm. sorry, the AIDS Project Los Angeles and the End the Epidemics folks on the comments around the naloxone move. These are incredibly, as you've heard from folks, these are incredibly important funds to keep in harm reduction and we hope you'll do that. Thank you.

Hello again. Omar Altamimi with the California Pan Ethnic Health Network here to request an ongoing $5 million from the General Fund to increase wages for community health workers, promotoras, and community health representatives. CHWs provide culturally informed healthcare services. And improve health outcomes across California communities of color and other vulnerable communities.

Last year the Legislature approved this funding for health workers. However, budget trigger language was added to make the investment inoperable if Proposition 35 was passed. Since Proposition 35 passed, CHW PRs have lost their promised wage increase. We're also in support of 0 to 5 continuous care which was also rendered inoperable as a result of trigger language in the passage of Prop 35. Thank you.

Good afternoon. Yasmin Peled on behalf of Justice and Aging, I echo the comments of my colleagues from the Western Center on Law and Poverty and Health Access on urging the permanent extension of the unwinding flexibilities to prioritize the coverage of those on MediCal. Thank you.

No other public comment. Okay, seeing no other public comment, we are going to move to issue three. So thank you to our panel. We're going to go to Proposition 5 implementation and background is on page 13 of the agenda.

We're asking the Department to give a brief overview of Prop 35 and provide an implementation update and feel free to start as soon as you're ready.

Proposition 35, approved by the voters at the November 2024 election, continuously appropriates managed care organization or MCO tax revenues beginning in 2025 and provides administrative authority to establish new or modified payment methodologies.

Prop 35 requires the Department to consult with the Stakeholder Advisory Committee to be appointed by the Governor and the Legislature prior to formally proposing or implementing any of the payment methodologies.

For calendar years 25 and 26, Proposition 35 appropriates up to $4.6 billion annually for investments in 12 domains, including general support of the MediCal program and more specific provider investments based on the 2023 Budget Act term sheet.

In regards to the timeline to begin implementation of Proposition 35, as I noted, the proposition requires us to engage in consultants with the Stakeholder Advisory Committee before proposing and implementing any payment methodologies, specific implementation dates and associated payment, so again that cash flow of when the dollars come to us, are contingent on the specific methodologies adopted.

We are currently developing timelines and content for the first few committee meetings, and we'll be able to provide specific proposals and timelines after we have consulted with the committee. The committee can convene with a quorum of six members. There are currently nine members appointed.

Just last week the last member was appointed a Senate appointee to make nine members of the Labor Representative, and we are still the Governor's final appointee for private emergency ambulance provider. Post 2027, the current MCO tax is authorized in state law through December 31, 2026, and federally approved for the same period under the current federal regulations.

In its approval dated December 20, 2024, CMS or the federal government provided a companion letter stating that although California's MCO tax met the existing statistical test established in regulation, CMS intends to update regulations through the rulemaking process to revise the statistics statistical test.

We expect such revisions may prevent California from being able to maintain the size of the current MCO.

On March 3, 2025, the federal government published a note in the federal registrar that it would no longer use the rulemaking process for certain matters, including public grants and benefits, which could be interpreted to include federal Medicaid funding and just flagging that in terms of future federal action on our provider taxes.

So we are unable to speculate at this point what that might mean for the size of a future MCO that would start in 2027.

In proposing augmentations for 2025 and 26, including the structure and the duration of such augmentations, we will be mindful of the 2025 and 2026 payment methodologies and framework considering what might be available in 2027. That I will, happy to answer any questions.

Any other comments from DOF for LAO?

Nick Mills, Department of Finance. Nothing to add at this time, available to answer questions.

Jason Concenturos, LAO, we thought it'd be helpful to add a little more context to the issue here, and there are three particular things I'd like to cover.

First, just where we're at right now with Proposition 35 implementation. Second, our initial comments on where we're at right now. And then third, some key questions to be considering as more information becomes available. So first, in terms of where we're at right now, what's really before the Legislature at the moment is an initial spending plan.

Now, if you're looking for a little more information on that initial spending plan, you could turn to page 18 of your agenda.

Page 18 of your agenda is a table that came from one of our analyses, but it's a short summary of where the MCO tax spending plan is anticipated to be at the moment relative to where things were at in last year's budget. And in particular on that table on page 18, I'd emphasize three points.

First is that MCO tax revenue is estimated to be up. That's over the complete multi-year, including through 26-27. And that uptick in revenue is primarily due to additional quarter funding that the state received that wasn't anticipated in last year's budget.

The second thing I would note is that over that multi-year period, there's less MCO tax money available to offset general fund spending for the MediCal program. And then the third thing I would emphasize is that there's more MCO tax funding available for greater augmentations in MediCal and other health programs.

These are things like provider rate increases and other augmentations to health programs. And the reason why you see this here is because of the administration's interpretation of Proposition 35.

This creates rules around how you spend the MCO tax revenue, and the administration is interpreting that to require more MCO tax money fragmentations than to offset general fund spending than what had been adopted in last year's budget. Now, our comments on this initial spending plan start on page 19 of your agenda.

And the bottom line of our comments is that at the moment we don't see anything concerning. We find the administration's initial plans reasonable and we follow how they they get to where they're at.

That said, there isn't a complete plan at the moment to really dig into, and that's because of the fact that Proposition 35 was enacted just a few months ago, and there are a number of steps the administration has to take, including doing a stakeholder consultation process, which the DHCS just noted earlier.

So third, given that while there isn't a whole lot to dig into at the moment, we do think this is a good time for the Legislature to begin thinking about early overs over Proposition 35 implementation. And to that end, we did offer six questions for the Legislature to consider.

You can see that on page 20 of your agenda. That's again where it says, in addition, the LAO highlights. There are six questions there.

The first three questions really are around the implementation of the augmentations in Proposition 35, around the timing of when the department will begin implementing them, how the department will structure these augmentations, and then when the funds will flow to the providers themselves. And these questions have been pretty salient as of late.

Prior to Prop 35, there was a lot of discussion last year about how to spend MCO tax revenues. There was a lot of discussion around how to structure the payments, particularly in the managed care system where most services are now delivered.

And then experience has shown that it can take some time after augmentations are approved for the funds to actually flow to providers, particularly when they're in the managed care system. One of the main reasons for this is managed care plans have to go in and renegotiate their contracts to implement those rate increases.

The questions 4 through 6 are more around some of the fiscal uncertainties around the MCO tax and Proposition 35. As the department noted, the state has been grappling with some fiscal uncertainties, particularly with the possibility that the next MCO tax is much lower in 2027 than it is currently.

That's because of the signals that the Federal Government has given around potential rule changes. These rule changes haven't happened yet, so they're not a certainty, but they have sent strong signals through various letters to the state.

If the MCO tax is smaller than it is currently, that would provide less funding to offset general fund spending in MediCal, which would require more funding from the general fund. But in addition, there would also be less funding for augmentations.

And experience has shown that when this happens, there can be cost pressure to backfill some of those losses as well. This has been the experience, for example, in Proposition 56. This was the last sort of major rate increase for, in the sort of MediCal program. It was funded by tobacco taxes, tobacco tax increases.

And as those revenues have declined, the general fund has stepped in to sort of backfill those declines. And as you've heard us note in other hearings, the state budget really is anticipated to have very little capacity for new ongoing commitments.

And so given that, we think it would be a good opportunity to really better understand how the department and sort of managing these risks as it's moving forward with Proposition 35 implementation. Thank you.

Thank you. I'll just start with a couple of questions. I represent a very, very rural area and the MCO tax was widely popular, I think widely popular across California.

And I certainly supported it with the hope that we would hurry up and get these rate increases going so that we could bring providers into the area and we could address some of the problems that were brought up earlier in this hearing around provider access. We've done so much to expand healthcare coverage.

I mentioned at the top of the hearing, 94% of Californians now have healthcare coverage, but so many folks can't access providers. And what people in rural areas will point to is that providers just simply cannot afford to practice in rural areas because the reimbursement is so low.

Hence the MCO tax came along and was seen as a potential part of a solution and one that I'll reiterate was widely popular. And I hear that you have quorum for the committee. I hear that, you know, a timeline is needed.

But I'm wondering why hasn't this gotten started and when people can expect to get these rate increases? Because meanwhile, while we're sort of waiting for these processes to play out, there's people that are literally without care or have a year-long wait time or can't get to a specialist or whatever is going on.

They've got insurance and they simply cannot get the provider while these what feels like unneeded delays are happening. And so I'm wondering how do we break through that, particularly when you do have quorum and could get started.

So the last legislative appointee occurred last week. And so we are working on a timeline to convene the committee. It is Bagley-Keene. So there's 10-day noticing, there's all the kind of the requirements to establish the first committee hearing. So we are working on a schedule to convene the committee as soon as possible.

We were waiting for the last, I mean recognizing there's still one more appointee to be made, but recognizing that all the legislative appointees have been made now.

And when do we expect to then see the rate increases?

That will depend on the, you know, the kind of the series of the meetings, the proposals being put forward, stakeholder feedback and the timeline to implement some of these and when it is possible based on the structure of the, of the methodology, each of these rate increases will be different.

And how do we light a fire under this to get some urgency?

There's definitely a fire lit under this, but it is a matter that, the proposition lays out a process and so we could not move forward without the committee being appointed. And now going through the process Bagley-Keene every meeting has to have, you know, the proper notification. And so we are following the process outline in the proposition.

Okay. I hope a 10-day notification. Obviously we're going to keep to the letter of the law, but I hope that the 10 days is the maximum if these are going to be delayed. Not that that doesn't become the focal point if that makes sense.

Of course we're going to follow the letter of the law, but I think we're ready to go and I think the people of California need us to be ready to go with that. Any other questions from the committee, Ms. Schiavo?

So are there will federal policy changes reduce the size of the managed care organization, the MCO tax at all?

So the federal government and the new federal administration and even the prior administration had sent signals whether it was the letters that they sent when they approved the prior MCOs. That there are considering changes to the way the kind of the structure of the MCO.

And so there is potential that the next MCO that would be effective January 1, 2027 would be at a reduced size.

Okay. But we don't know for sure which direction or what policy change or do we have indications of that?

There are different kind of criteria by which the MCO, whether it's percent of revenue, whether it's the ability to kind of tax differently based on payer source. There are different criteria. And so those are the things that the federal government has flagged previously and continues to flag that are places that they're looking into.

And the. I guess this is for you and the LAO too, the general fund. Do we think it'll have more capacity to cover costs in 2027? It sounded like you were projecting increased revenue or the projections are that there is increased revenue from this now. So I just want to make sure I'm understanding that piece.

Yeah, sure. So, I mean, as the department noted, there's a possibility that the next MCO tax is much smaller than the current one. So the next tax would start in 2027. The current one extends through the end of 2026. And were the next tax to be smaller, there would be less MCO tax revenue.

And the MCO tax is used for two purposes. One is to pay for existing services in MediCal. That basically means we don't have to spend as much general fund on that than we otherwise would. And then the other portion is used for augmentations like rate increases or other health program increases.

So if the next MCO tax is smaller, then there's less money for both purposes. In addition, there are also some changes in Proposition 35 itself. So Proposition 35 changes the rules on how to spend the funds change beginning in 2027.

And the rules are somewhat complex, but the overall effect is that more public funding has to go for augmentation, less for general fund offset. So were this to happen, that would mean that to maintain the existing MediCal program, there would be more cost to the general fund.

And as we've noted in our kind of overall budget publications, both our office and the administration projects deficits in the out year. So beginning in sort of budget year plus one, and the size of the deficits sort of vary. And it's a projection that continues to evolve.

But because there are sort of projected out your deficits in our review at the moment, there doesn't seem to be much capacity for new ongoing initiatives in the budget. And so that means to the extent there is sort of cost pressure, that that's something for the legislature to keep in mind.

One thing I also want to emphasize is in our outlook, we did make assumptions about the size of the tax being smaller. And so some of those, some of what we found in our outlook sort of baked some of those assumptions in. But again, it really depends on what the future looks like.

And that's just really hard to project at the moment.

And you're saying the size of the tax is going to be smaller because.

So as the department noted, there are a number of rule changes that are being contemplated at the federal level. One that had been sort of long-standing, the state had been getting signals even prior to the start of this year was the desire to make the tax more proportionate.

The current MCO tax, 99% of the revenue comes from a tax on MediCal enrollment. Just really one less than 1% of the revenue comes from tax on private insurance. And that's just because the tax rates are much larger.

And the federal government has concerns about that and has written letters that they would like to make the tax more proportionate between MediCal and commercial. That's because the tax on MediCal enrollment is really paid by the federal government as part of the MediCal program.

Part of the challenge is that Proposition 35 limits the size of the tax on private health insurance.

And so because we have those limits, if the tax were to become more proportionate, it would raise sort of these competing rules in place that the state would have to grapple with when it goes to restructure the tax and submit it for federal approval.

In addition to that, there are some other changes that have been considered at the federal level. For example, there's a revenue limit and they've been considering reducing that revenue limit. That's also a very direct way that the tax could become smaller too.

Thank you.

And on another issue, we know also that there were certain programs funded in last year's budget as a condition of the, in the budget, but on the condition that Prop 35 was not passed by the voters, one of them being the congregant living health facilities, CLHFs, which provide acute level care to medically fragile individuals that live in the community.

These facilities are generally for folks who have suffered catastrophic injuries such as traumatic brain injury or spinal cord injuries. This critical programs for people to live in the community and live independently, largely independently. They haven't had a rate increase in 40 years. And so is there a way.

How are we thinking of addressing the needs around the care that's provided in CLHFs since it ended up being then lost because of the passage of Prop 35?

Yes. I recognize the concerns that were raised with CLHF rates and they were part of the 2024 Budget Act. But as you not with the passage of Proposition 35 were made interoperative. We do not have a proposal in the governor's budget to increase rates there.

I mean, if there's not a proposal in the budget then can you also look at, there's been increases in the cost of licensing, which has gone up from 2012, which is $219 to now $1700. It's certainly not enough, but it's an area in which we could at least provide a little bit of relief. It's not.

I mean, there's not a lot of CLHFs. It's not a lot of money. At the end of the day, we have to figure out how to include them and wonder if there's a sense of how many programs there are, how much it would cost to fund them.

And are there any discussions at all around this issue to try to figure out how to address it?

So the Department of Public Health actually licensed CLHF, so it's conversations that we could have with them.

Okay, thank you.

Seeing no other comments, we'll turn to public comment. And if you could please make sure your comments are directed towards Prop 35 implementation and keep your comments to 30 seconds or under. And if you're doing a me too. If you could state your name or organization and position only.

Good afternoon, Madam Chair and Members. George Soares with the California Medical Association. We look forward to working with the department on the implementation of Prop 35 to maximize access to the MediCal system.

To achieve this goal, the Advisory Council should be convened as soon as possible in order to develop a funding plan and provide federal government with state plan amendments in order to raise rates. These amendments are reviewed on a quarterly basis, so any delay in creating a plan potentially jeopardizes hundreds of millions of dollars in federal matching funds.

Additionally, we want to increase access to the MediCal by creating a larger provider pool. And this requires the state to clearly articulate a funding plan so physicians can increase the number of MediCal patients they provide care to. Lastly, rate increases often take a long time to reach physicians.

Some plans have failed to implement the 2023 and 24 rate increases which were included in the budget nearly two years ago. We want these types of issues to be resolved to ensure patients can access the care they need. We appreciate the time and thank you.

Good afternoon. Mark Farouk, on behalf of the California Hospital Association. First just wanted to thank you, Madam. Chair, and the Committee Members for expressing the need to get this MCO funding into the communities that need it most. Also want to thank the Department for also expressing their understanding of the urgency to get this funding out.

Prop 35 was passed with nearly 70% voter approval. This is critical funding for primary and specialty care services. This is critical to expand and enhance patient access in the communities that need it most. It's vital that we get this spending plan ready to go and get this money into the communities that need it expeditiously. Thank you.

Good afternoon, Madam Chair and Members. Bryce Docherty, on behalf of the California Orthotic and Prosthetic Association here today seeking Prop 35 MCO tax investment and TRI's for orthotic and prosthetic outpatient devices. Orthotist prosthetists are MediCal providers that fit, furnish and fabricate customized devices that restore or replace function resulting from limb loss and congenial limb indifferences.

Research shows patients who received timely orthotic and prosthetic care had lower total healthcare costs than a comparison group of untreated patients. Among the 5.6 million individuals in the United States living with limb loss and limb indifference, approximately 90% of those cases are caused by diabetes, peripheral vascular disease, and trauma.

Almost 200,000 amputations occur in the United States each year. Inpatient hospital costs associated with amputation alone totals more than $8.3 billion annually. Thank you for your attention on this important subject. We look forward to working with you, the committee, the department, the Advisory Committee, and all stakeholders as the MCO tax unfolds. Thank you.

Good afternoon. Christopher hall with PHI Air Medical. We have five bases of air ambulances that serve rural California. We transport patients 24/7, 365 without knowledge of ability to pay, and we do so willingly.

As you guys light the fire and start looking at MCO attacks in 2027, we please ask that you shine a light on the need to make sure we have sustainable funding for air ambulances for 25 and 26 as well, so we can continue to do our jobs. Thank you.

Vanessa Hayflich with Air Methods, we provide emergency air services throughout Mercy Air and Skylife programs here in California. We operate 26 air medical bases in California. Last year we completed nearly 7,000 emergency transports and over 40% of those were MediCal patients and a majority of those cases were children.

We are facing a financial strain that has already resulted in the closure of a base and emergency air medical providers cannot sustain operations at this level without critical bridge funding for MediCal over the next two years.

We are concerned that without funding, further bases will be put at risk with devastating impact to rural areas and children's hospitals. Thank you.

Hello Madam Chair and Committee, thank you for your time here. I am honored to support air medical transport reimbursement as well. My name is Lisa Epps. I'm a flight nurse and with Air Methods and covering the Central Valley and Central Coastline. I also represent California Association of Air Medical Services as past president.

We cover over 70 air ambulance services or bases, 164,000 square miles serving more than 39 million Americans. You've heard some of my colleagues about loss of funding and potential risk-based closures if required to go these two years.

Rural hospital closures have also impacted and made air transportation support services much more vital so that we can bring life-saving care and blood to those places. So thank you for your time.

Thank you very much. Vanessa Cajina on behalf of the California Academy and Family Physicians. Would concur comments with those of the California Medical Association regarding hastening Prop 35 payments. By getting them out into the community, that means that we're going to be serving a lot more underserved people.

Family medicine treats underserved people in rural communities and we were big supporters of Prop 35. So we asked for this committee's continued oversight. Thank you very much.

Madam Chair and Members, Katie Layton on behalf of the Children's Specialty Care Coalition, which represents over 3,000 pediatric specialty physicians statewide. There is an acute and growing workforce crisis within the pediatric specialty physician network resulting in serious access challenges for children and youth with complex health care needs.

The rate stabilization provided under Prop 35 is essential to addressing this issue, particularly since the rate increases for this year explicitly include specialty care. We just want to underscore the importance of DHCS expeditiously convening the Stakeholder Advisory Committee and submitting the state plan amendment to CMS in order to maximize federal funding. Thanks for the opportunity to comment.

Hello. Thank you. My name is Angel Bustos on behalf of Newstart CLHFs. Without their programs, we wouldn't be able to be more independent and like they said, you save more money by having these programs around because we're able to be independent and we get to leave MediCal Medicare when we don't need it anymore.

So the next person who really needs it can step in and get the help they need. That's all I got to say. Thank you.

Hello, my name is Adam Hancock. I'm on behalf of New Start CLHF. There are different levels of medical care, obviously. cute care is more expensive and not necessary for somebody in my situation. The CLHFs provide the appropriate level of care, higher quality of life with less expense to MediCal.

So they're vital for people in my situation and they, I can say they honestly saved my life. They gave me a life worth living and it's important for people in the community to be able to pursue worthwhile lives. Thank you.

Good afternoon. Thank you for the opportunity. My name is Shawn Welch and I'm the owner of three CLHFs and serve some of the most vulnerable in our health care system. Nearly 10 billion, almost a quarter of MediCal's general fund is being allocated to health care for some undocumented immigrants.

While community-based programs like CLHFs have received nothing in 40 years. Individuals like Adam and Angel are living proof of the success of transitioning to a Cliff from acute or subacute hospital or skilled nursing. These two men, along with thousands of others have the opportunity to thrive in a community-based care.

Yet instead, right now they will be forced back into large overcrowded skilled nursing facilities which severely restrict their personal freedom and even prohibit power wheelchairs. Today, Adam and Angel have come to share their stories. I urge you to imagine these young men sitting before you being forced back into skilled nursing facilities for the rest of their lives.

When we have a proven solution over a success for over 40 years, which my mother Mary has founded, we are asking for just a fraction, $7.7 million from the 38 billion allocated elsewhere. This is a drop in the bucket. We need to act for young people like Adam and Angel. Thank you very much.

And I'll just ask if you could keep your comments to 30 seconds or less.

Hi, good afternoon. My name is Marianne Voskanyan and I'm an owner of a congregate living health facility in the City of LA. I thank you for your consideration for an increase in funds with Prop 35 but unfortunately with the passage we weren't able to get the funding we need. We are asking for a very modest increase.

Just as mentioned earlier, there are not many CLHFs. And we're asking for $8 million from the general fund in order to be able to keep our doors open and to keep these young gentlemen and individuals like them to be living in the communities versus institutions and hospitals. Thank you very much.

My name is Mary Williams and I'm actually the founder of Congregate Living Health Facilities back in 1982. We were first licensed in 1987 and since then hundreds of young men and women just like Adam and Angel are living proof they're out in the community.

And they have not only gone through the Congregate Living Health Facilities, but have advanced to being working members of the community such as Adam. Adam has got his own business. He has raised money for our nonprofit organization.

Independence is the vital issue of being able to fund Congregate Living Health Facilities because it is there that they learn how to be able to access the community which without training, without the skills that they have in the congregate living health facilities, we will not be able to continue giving this type of care. Thank you very much.

Thank you.

Good afternoon, My name is Erica Toth from Los Angeles County Lomita. I'm also a Congregate owner myself. I have six residents and the majority of the patients are MediCal waiver patients. And sadly last year on paper we got some increase after 40 years and because of Proposition 35 passed, unfortunately we weren't carved in that.

Unfortunately we're struggling on the daily basis LVNs, they're asking double of the rates on the hourly rates and never mention if we have to call staffing agencies. They are starting the rates for LVNs as registered nurses and basically every two weeks when I have my payroll, I'm struggling to pay my employees.

Unfortunately if we don't get an increase, you guys are going to put out of us out of business. And we are respectfully asking your help. And thank you so much for having us here today. Thank you.

Good afternoon, I'm Guiana Vartanya. I am a member of CLHF Association. I just would like to kind of remind you the unique line of practice we have at the congregate living health facility which you cannot find at anywhere. We are community-based. We have ratio one to six nurses to six patients.

We have very different therapies going on which we are located to residential area which you cannot find anywhere else. Another very important thing which I would like to,

I don't mean to interrupt you I'm going to ask you to wrap up your comment and if you have a me too on this issue, if you could provide your name, your organization and your position.

Yes, I did. Guiana Vartanya from CLHF Association. Great. Thank you. Sure. So we are.

Asking for, you know, the increase of funds which, you know, because of that we'll be able to continue, you know, keeping our doors open for our young members. Thank you.

So I'm going to just ask you to wrap up your comments.

And I'll just remind you if you are restating a position that's already been stated. If you could please provide your name, your organization, and if you support the previous comment, then keep it under 30 seconds.

My name is Irene Tocar and I'm the owner and operator of Congregate Living Health Facilities. We provide daily care for people who you see in front of you. I want to thank you, Sean and Mary for bringing them.

This is hugely important for everyone to see and I support previous comments about respectfully asking everyone to relook for all the opportunities possible to help us to increase the rates because without this and with of course passing Prop 35, many of our members are going to unfortunately close the doors and who will be not able to meet competitive salaries for nurses.

And this will mean that people like this will have to go back to skilled nursing facilities where the quality of life. Bless you. Will be different.

Ask you to wrap up your comments, please.

Thank you for understanding and listening and looking for the opportunities for us. Thank you.

Good afternoon. Thank you Chair and Members, Molly Maula on behalf of Planned Parenthood Affiliates of California, 85% of Planned Parenthood patients in California rely on MediCal. And so we echo the comments that you heard earlier from the California Medical Association and family docs around urging the department to convene the Prop 35 Stakeholder Advisory Committee as soon as possible. If we delay much longer, we will, the state will forego federal matching dollars.

And given the State of the MediCal budget, we want to ensure that we take advantage of those resources and draw down additional support for Californians who rely on MediCal. Thank you.

Hello. Good afternoon. My name is Leticia Harris and I'm here supporting Congregate Living Facilities. But I'm advocating for my husband, Derek Harris, who suffered a traumatic brain injury in 2023 and he is in a facility currently right now.

I wholeheartedly, I'm asking for you guys to support these communities because my husband is constantly being pushed off to further facilities, skilled nursing facilities that are two hours away from my home. It puts us in a horrible bind and a hardship to try to be with our family members because they don't have facilities that are near us.

So I'm asking just with everything that I have, these other facilities do not provide the kind of skilled nursing that we need at the congregate living facilities. They are twice what we pay to be at these facilities and we're getting subpar care every single time.

My husband almost died in one of the facilities because I was two hours away from him and I couldn't be there every day and they weren't taking care of him properly. Me being there every day and being in a congregate facility that is near my home just.

It helps with the overall care and rehabilitation for my husband who needs that. Thank you for your time.

Hello, Chair and Assemblymembers. My name is Sakos Sarkeesian. I'm a member of the CLHF Association. I also own and operate a CLHF in Glendale. I appreciate your consideration of our modest 8 million general fund requests and your support in making CLHF a managed care benefit. Thank you.

Madam Chair and Members, Tim Madden, representing the California chapter of the American College of Emergency Physicians, wanted to thank you and the committee for your continued focus on the Prop 35, particularly the stakeholder advisory group, the implementation. We're excited and encouraged by the department's comments about convening that as quickly as possible.

Emergency physicians are in the unique position that they were a part of the 24-25 budget. So we actually engaged with the department in the fall of last year. So I think we provided them with some good feedback that hopefully once the stakeholder group convenes, we can accelerate their rolling out of their rates quickly.

The emergency physicians have already started to increase their staffing as a result of anticipation of these funds and just want to point out that this benefits all Californians. Anyone coming into the emergency department will benefit from that increased staffing, not just MediCal employees. Thank you.

Good afternoon, Madam Chair and Members. Nick Brokaw from Sacramento Advocates here on behalf of the California Academy of Audiology.

Really to reiterate the urgent access care issues facing low-income, hard-of-income, hard-of-hearing Californians, whether it's meeting the needs of our members, MediCal patients, or the 7,000 children in the state who need assistance through the Hearing Aid Coverage for Children program, targeted rate increases for audiologists is a vital step towards improving access to care.

We very much appreciate this body's history of leadership in the space and would urge the Committee to support the efforts to ensure California's hearing-impaired poor have access to the audiology services they need. Thank you.

Good afternoon, Madam Chair and Members. Connie Delgado on behalf of the District Hospital Leadership Forum. These are the 33 district and municipal hospitals in the state. We'd like to align our comments with those of CHA.

We'd also like to note that the district hospitals provide a tremendous amount of service to very vulnerable populations in the state and we look forward to expeditious rollout of this proposal. Thank you.

Good afternoon. McKay Carney here today on behalf of Cedars-Sinai, would like to echo the comments from CHA and further emphasize the importance of ensuring that private, not-for-profit academic medical centers such as Cedars-Sinai receive adequate graduate medical education funding. Thank you.

Good afternoon. Eric Dowdy with the California Dental Association. I'd like to echo the comments of both CMA and Planned Parenthood on the Stakeholder Advisory Committee. We need to see that hopefully convened before March 31st so we don't lose hundreds of millions of dollars of matching funds. So we look forward to working with you all on implementation. Thank you.

Chair and Members. Shannon Olivieri Hovis with Essential Access Health. Essential access supported Prop 35 because we understood the urgent need to bolster our MediCal program to protect and expand access to care for MediCal enrollees statewide. Now we stand ready to support implementation with our Co-CEO Amy Moy appointed to serve on the stakeholder workgroup.

We recognize the time sensitivity of the workgroup meeting to ensure that California can draw down critical federal matching dollars for the first quarter of this year.

We're glad the department is committed to begin meetings and look forward to starting those to make the promise of Prop 35 a reality for MediCal patients and providers and to not miss out on drawing down significant federal funding at this critical time. Thank you.

Good afternoon Chair and Members. Jared Maas on behalf of the University of California Health, we support quick implementation of the Prop 35 investments that strengthen the MediCal program. UC Health as part of the public health care safety net and serves patients from 91% of California zip codes.

The provider rate increases will support the inpatient and outpatient care we provide to medical patients across the state. UC is also responsible for administering the 75 million annually that is designated for graduate medical education to address the physician shortage. These resources will increase the number of new residency programs in California.

We stand ready to work with the administration and the Legislature on these efforts. Thank you.

Kelly Brooks here on behalf of the California Association of Public Hospitals. We want to align our comments with the California Hospital Association. We also want to highlight the importance of the $150 million bucket for public hospitals, which is particularly important in light of our continued structural deficit and the risk of proposed federal Medicaid cuts. Thank you.

Good afternoon Madam Chair and Committee. Rebecca Sullivan with Local Health Plans of California. We thank the Chair, Committee, and Department for the discussion on the implementation of Prop 35 and the commitment to move this advisory group quickly.

LHPC aligns with our previous colleagues commenters on the urgency of Prop 35 implementation so that we do not leave federal dollars on the table. LHPC was appointed by the speaker to serve on Prop 35 Advisory Committee and request that we call the meeting as soon as possible.

At the heart of Prop 35 is ensuring access to high-quality care for MediCal members across the State of California. Therefore, it is essential to move quickly. Thank you.

Whitney Francis with the Western center on Law and Poverty. We echo the Children's partnerships calls to implement multi year continuous MediCal coverage for children under age six in the 25-26 budget and ongoing. Losing coverage disproportionately impacts children of color who make up 3/4 of children covered by MediCal worsening health disparities.

Children can't benefit from the state's investments in mental health and early childhood development if they lose coverage. We also align our comments with the California Pan-Ethnic Health Network regarding the community health worker wage increase. Thank you.

Christine Smith of Health Access California. And we align our comments with Western center on Law and Poverty regarding the multi year continuous coverage. Thank you.

Omar Altamimi with the California Pan Ethnic Health Network. Aligning my comments with the previous speakers as well as in relation to Prop 35, ensuring that equity is embedded in how dollars are allocated moving forward is incredibly important. We urge strong transparency and metrics to measure impact to medical enrollees.

We know that legislators are deeply concerned about the rising costs in MediCal. We know it's the success of the asset test removal, federal flexibilities and the success we've had expanding the program to all state residents and even now diverting more MCO tax funding to providers under Prop 35.

Immigrants should not be singled out and we must continue to ensure all state residents are eligible for healthcare services in MediCal when they need it. Thank you.

Good afternoon. Andrea Amavisca with the California Primary Care Association. We appreciate the committee's focus on Prop 35 implementation as we are concerned with the Administration's delay in communion of the Stakeholder Advisory Committee. We urge the department to convene the committee as soon as possible.

Payments from last year's TRI's have yet to reach some providers and the longer the administration waits to convene the Advisory Committee, the longer the delays for 2025 payments to go out in support of MediCal and increase access to care.

We urge the department to ensure that Prop 35 is implemented as intended and in alignment with the voter's intent.

In particular, we urge DHCS when deciding how to distribute funding in the primary and specialty care buckets, to ensure that FQs and clinics receive increased payments from Prop 35 and that these funds are not subject to reconciliation as specifically prohibited in the initiative. Thank you.

Madam Chair Terry McHale with Aaron Reed and Associates representing the California Optometric Association. Really appreciate the committee staying here this late and I'll use my 30 seconds wisely. Dr. Ali, an optometrist from your area because of his loss of Prop 56 supplemental money went from $70.40 from a moderately complex appointment to $26.40. It is absolutely not sustainable.

It's in every single one of your districts and if we don't do something for optometry, poor people, people who are struggling will end up with a stye in their eye like mine and never get rid of it. So please, let's take care of optometry.

And for anyone else who wants to know how bad the numbers are, I can stop by and see you. Thank you very much.

Madam Chair and Members, Dominic Di Mare here on behalf of Air Methods flying in California as emergency medical air service as well as SkyLife and Mercy Air here in support of the $8 million this year and in the next budget cycle as bridge funding for between now and the time that the next MCO goes into effect.

The money that we got last year represents the first rate increase that emergency medical air transport has gotten since 2011, which is a really long time and costs have only gone up as you know.

So we're appreciative of what happened last year and we support the continued expenditure of those funds that will eventually get us $20 million in matching funds from the Fed. So appreciate your time and thank you.

Madam Chair and Members. Nicole Wortleman on behalf of the Children's Partnership.

The Children's Partnership is requesting funding for two policies that were cut because of the passage of Prop 35 continuous medical eligibility for children 0 through 6 as well as a thriving wage for couple community health workers during a time of great uncertainty for so many California families.

California must make clear its strong commitment to protecting well being of its children. Given the significant role MediCal plays in providing families coverage, we request full funding to implement continuous coverage as well as provide a higher wage for community health workers.

Assembly, My name is Vincent Amazona from Bakersfield, California. I'm the owner of four Congregate livings and I'm here to also put my my emphasis on the the point that was made here today. I wasn't really going to speak.

I do have a letter from one of my patients families and I'd like to go ahead and read that to them. I'd be remiss if I didn't represent him today. My name is Michael A. Lackey. My son, Michael D. Lackey is currently a patient in the Veteran Administration Hospital in Long Beach, California.

He was involved in a serious auto accident in March 2021 and became a quadriplegic. He is also required to use a ventilator in order to breathe. He has made substantial medical progress to become a stable patient.

I have been searching for a long-term care facility in Kern County, California that would allow him to be closer to me and the rest of his family and friends.

In the past four years of searching I've only found Parkside Congregate Care Living to have the skills and desire to accept my son as a long term care patient. It is unconscionable that the State of California has rules in place that excludes Congregate care living from being recognized as an acceptable level of caregivers.

I'm confident in their skills and desire to serve this strata of long-term care patient. I request as earnestly as possible that you remove this unjustified restriction and allow my son and so many underserved patients to receive professional medical care in a safe and caring environment closer to their homes. I also implore that the public as.