State Budget

05/14/2008: Summary of the Governor's May Revise prepared by the Department of Mental Health

M E M O R A N D U M

DATE:                  January 10, 2008

TO:                     CCCMHA Members

FROM:                 Rusty Selix, Executive Director

RE:                      Governor's Budget - EPSDT Cut and Other First Glance

                            Mental Health Impacts

The Governor's 2008-09 State Budget seeks to eliminate a $14.5 Billion deficit in one year.  The Legislature is not likely to go along with that and most likely will be trying to work with the Governor and Republicans to spread the pain out over many years but should that not happen here are the parts of the Governor's proposal that, if enacted, will have the biggest impact on community mental health providers:

(note that these are first take reviews and we will revise when we get more information from the Department of Mental Health, Counties and others who may have more comprehensive information that might clarify or modify some of these statements.)

1. EPSDT - No COLAs, 5% Reduction in non inpatient SMA (State Maximum Allowance or Rate), prior authorization for day treatment every six months after first six months - to save an estimated $46 million in state funds or $92 million total from the EPSDT changes and an additional $23 million state for SMA reductions for 08-09 If implemented in time to be effective for part of 07-08 there would be additional reductions of $6.7 million state or $13 million total in EPSDT plus $8.2 million state from SMA reduction.(Agencies will need to effectively document to legislators why they need COLAs and, if applicable, why their costs are at the SMA and that these are cost based rates so any reduction means that agencies lose money for every unit of service provided.) There are similar provider rate reductions proposed for MediCal managed care plans, MediCal fee for service providers, social service providers and others.
2. MediCal Managed Care Payment to Counties - $23 million reduction

3. Payment Delays - Over $5 Billion of the budget balancing is achieved through one time delays in payments to local government and providers.  Those directly impacting county mental health include $200 million for a July to September delay in Mental Health managed care programs, $92 million by delaying a quarterly EPSDT advance from July to September and the mental health share of a $164 million in savings from delaying the first quarterly payment to counties for MediCal administration

4. Suspension of 2008 and 2009 SSI/SSP COLAs - The proposed SSI/SSP program budget-balancing reductions include $23.3 million in 2007-08 and $300.3 million in 2008-09, achieved by suspending the June 2008 and June 2009 state COLAs. Under this proposal, recipients will still see increased payments in total benefits in both years due to provision of the federal COLAs. In January 2008, SSI/SSP monthly payments for aged and disabled individuals increased from $856 to $870, and monthly payments for aged and disabled couples increased from $1,502 to $1,524. In January 2009, the monthly payment for aged and disabled individuals is estimated to further increase to $881, while the monthly payment for aged and disabled couples is estimated to further increase to $1,540.

5. Elimination of MediCal Optional Benefits  - Reduce 2007-08 by $20.2 million ($10 million General Fund) and 2008-09 by $268.2 million ($134 million General Fund) by reducing the number of optional benefits provided for adults over the age of twenty-one who are not in a nursing facility. The eliminated optional benefits include incontinence creams and washes, acupuncture, adult dental, audiology, optometry, optical, chiropractic, podiatry, psychology, and speech therapy. The elimination of adult dental benefits accounts for $115 million of the total $134 million in General Fund savings.  The elimination of these optional benefits will mean the loss of access to these services through the Medi-Cal program.

6. Reinstatement of Quarterly MediCal Status Reports - $184.4 million ($92.2 million General Fund) by reducing the 12 month eligibility period for children and the semi-annual eligibility period for parents in Medi-Cal and reinstitute quarterly status reports. This proposal would not change the income or asset limits for program eligibility, but would require beneficiaries to report income every three months so that they can be disenrolled if their income or assets are above the maximum. The family will be referred to share-of-cost Medi-Cal or the children bridged to the Healthy Families Program if they appear to meet income eligibility requirements for those programs.

REVENUE ESTIMATES, PROGRAMS NOT CHANGED AND

OTHER RELEVANT INFORMATION:

1. Realignment revenues for county mental health are now determined to have been $1.240 B for 2006-07 ($12 million more than was forecast last year, projected to be $1.256 Billion for 07-08 (which is $57 million LESS than had been projected last year and the combined impact is a net $45 million cut below previous estimates) and now projected to be $1.314 for 2008-09

2. MHSA - Revenues to the Mental Health Services Fund are projected to decrease over previous estimates by $177.2 million in 2007-08 and $105.2 million in 2008-09, for total estimates of $1.6 billion in 2007-08 and $1.7 billion in 2008-09.

3. AB 3632 - Fully funded on a mandate reimbursement basis with payments of $69 million through the Department of Education and $52 million through mandate reimbursement payments.

4. AB 2034 Program eliminated - Not even mentioned in the Governor's budget is the lack of funding for the AB 2034 program continuing the loss of $55 million and adding to the amount in dispute in a lawsuit filed seeking to have this cut invalidated and the funding restored.  (It will be several months before there is any significant news in the lawsuit and several years before it is finally resolved after appeals.

5. Growth in State Hospitals and CONREP - Due to court orders and related matters involving the hospitals and the criminal justice population they house  these facilities are exempt from cuts and are projected to add 560 staff and $79 million bringing the totals to $1.2 Billion to serve 6448 patients with 11,686 staff.  CONREP providers get a 4% COLA at a cost of $1.8 Million.