Last Updated: | 5/20/2010 |
Budget Issue: | Proposed Changes to California Medical Assistance Commission (CMAC) |
Program: | California Medical Assistance Commission |
Finding or Recommendation: | Recommend the Legislature adopt the Governor’s proposal to transfer contract negotiations for GMC health care plans to DHCS because we believe this action will likely achieve savings and may administratively streamline these contract processes. We have concerns with the Governor’s other proposals to shift other responsibilities to DHCS and allow the Department of Finance to reduce or eliminate CMAC appropriations in the budget year, because we believe they are premature. |
The California Medical Assistance Commission (CMAC) negotiates for certain hospitals inpatient hospital rates and supplemental payments as well as Geographic Managed Care health plan contracts on behalf of DHCS. To support these activities, CMAC has 16 full-time staff and a board with seven voting and two ex-officio members. Total budgeted expenditures are $2.6 million ($1.3 million General Fund) in 2010-11.
The Governor’s May Revision proposes the following changes related to CMAC:
Analyst’s Comments. California’s hospital financing landscape may change significantly over the next several years and we believe it is reasonable for the Legislature to consider the role and value of CMAC. There will likely be significant changes in hospital reimbursement due to a new hospital fee authorized by Chapter 627, Statutes 2009 (AB 1383, Jones) if the fees are federally approved. Furthermore, as part of the new 1115 waiver implementation plan, the administration has indicated its intent to work with the hospital industry to move private hospitals away from a per diem rate system to a diagnosis related group (DRG) payment instead. (DRGs are a way of classifying hospital cases into groups that are likely to have comparable resource use based on diagnosis, age and other patient related factors). A transition to such a payment system would also likely diminish CMAC responsibilities.
Analyst’s Recommendation. We recommend the Legislature adopt the Governor’s proposal to transfer contract negotiations for GMC health care plans to DHCS because we believe this action will likely achieve savings and may administratively streamline these contract processes. This transfer also appears consistent with other transfers of responsibilities to DHCS regarding County Organized Health System managed care plans.
We have concerns with the Governor’s other proposals to shift other responsibilities to DHCS and allow the Department of Finance to reduce or eliminate CMAC appropriations in the budget year, because we believe they are premature. Given the significant potential changes to the hospital financing landscape we described above, we believe it is reasonable for the Legislature to consider the future role and value of CMAC. However, this issue may be more appropriately discussed in a policy committee.