Medi-Cal: managed care organization provider tax.
What changed between versions
Added an entirely new Article 7.2 (Sections 14199.90 through 14199.97) to the Welfare and Institutions Code establishing a continuation of the MCO provider tax for the 2027, 2028, and 2029 calendar years. The original bill contained only a statement of legislative intent with no operative provisions.
Changed the vote requirement from simple majority to two-thirds of each house due to the bill increasing a tax within the meaning of Proposition 13 (Section 3 of Article XIIIA of the California Constitution). Also changed fiscal committee approval and appropriation status from 'no' to 'yes.'
Created the Medi-Cal Stability Fund in the State Treasury. Tax revenues are continuously appropriated to the Department of Health Care Services for: (1) administrative costs up to $4 million annually, (2) the nonfederal share of increased capitation payments to managed care plans, (3) the nonfederal share of payments under Section 14105.201, and (4) at least $2 billion annually for the nonfederal share of Medi-Cal managed care rates for children, adults, seniors, persons with disabilities, and dually eligible individuals.
Set the tax amount at $8.85 per countable enrollee per month, with the department permitted to modify it by up to 10 percent for 2027 and up to 25 percent for subsequent years if projected revenues are materially different from what is needed. The department may also establish taxing tiers based on enrollment ranges.
Amended Section 14105.201 of the Welfare and Institutions Code to change the reimbursement rate formula for primary care, obstetric care, doula services, and outpatient mental health services from a reference to subdivision (g) to subdivision (f), renumbered subdivisions, and added a provision allowing the department to discontinue directed payment methodologies once base period data reflects increased reimbursement levels.
The tax cannot be collected until either the Director of Health Care Services certifies in writing that the tax meets federal broad-based and uniformity requirements, or the department receives written approval from CMS. Interest accrues at 10 percent per annum on late payments, and a penalty equal to total accrued interest applies after 60 days overdue.
Added automatic inoperative provisions if the director determines the tax has not met legislative intent, was rejected by CMS where federal approval was necessary, or was found noncompliant with federal law and cannot be feasibly modified. Also added a provision for refunds if a final judicial or federal administrative determination finds the tax cannot be implemented.
The article becomes operative on July 1, 2026 (or the chaptering date, whichever is later). The tax is effective January 1, 2027 or upon federal approval if later. Provisions become inoperative on January 1, 2031 and are repealed on January 1, 2032, except for the Medi-Cal Stability Fund provisions to the extent not in conflict with federal law.
Defined 'countable enrollee' as an individual enrolled in a health plan during a month of the base year, excluding Medicare plan enrollees, plan-to-plan enrollees (subcontracted individuals), and Federal Employees Health Benefits Act enrollees to the extent preempted by federal law.