Historic Pay Raise for Medi-Cal Providers (California Medicaid)
January 1, 2024 marks a significant milestone in California's health care history. On this day, the largest Medi-Cal provider rate increases in the state's history will commence, heralding a new era of enhanced healthcare access for millions of Californians enrolled in Medi-Cal. This monumental initiative stems from the passage of a Managed Care Organization (MCO) Tax, a critical component of the 2023-24 budget deal orchestrated by the Coalition to Protect Access to Care, under the leadership of the California Medical Association (CMA).
Key Points
These rate increase will apply to eligible providers in the Fee-For-Service delivery system, as well as eligible network providers contracted with Medi-Cal managed care plans.
DHCS increased rates, as applicable, for targeted services to no less than 87.5% of the Medicare rate.
A Two-Phase Implementation for Enhanced Health Care
The rate increases, initiating in 2024, are just the beginning. They will be followed by additional hikes effective from January 1, 2025. The overarching objective is to bolster access and equity for Medi-Cal enrollees and to empower physicians and other providers to cater to more Medi-Cal patients.
Initial Focus: Primary Care, Obstetrics, and Mental Health
The initial phase targets primary care, obstetric services, and non-specialty mental health services. The California Department of Health Care Services (DHCS) has recently published the new Medi-Cal Targeted Rate Increase (TRI) Fee Schedule, effective from January 1, 2024. This schedule, available on the DHCS TRI website, includes revised codes from the list published in July of the previous year.
For each code, the fee schedule presents a targeted rate that is at least 87.5% of the lowest Medicare rate effective in California. Notably, for codes on the TRI fee schedule currently receiving Proposition 56 supplemental payments, these payments will now be integrated into the base rates, simplifying the payment process.
The Legislative Framework and Future Investments
Assembly Bill (AB) 119, passed in 2023, authorized the MCO Provider Tax from April 1, 2023, to December 31, 2026. Subject to federal approval, the revenue generated from this tax will support the Medi-Cal program, including these provider rate increases, and other investments aimed at advancing access, quality, and equity in health care.
In line with the 2023 Budget Act and AB 118, DHCS is set to develop provider investments across various domains in two phases:
Phase 1 (Effective January 1, 2024): Focus on primary care, obstetric services, and non-specialty mental health services.
Phase 2 (Effective January 1, 2025): Expansion to include additional areas like specialty care services, community/hospital outpatient procedures, family planning, and more.
These investments are poised to significantly impact the healthcare landscape in California, ensuring more equitable and accessible care for all Medi-Cal beneficiaries.
Eligibility and Scope
Eligible providers for these increased rates include a wide range of healthcare professionals such as physicians, physician assistants, nurse practitioners, and more. The initiative aims to encompass a broad spectrum of health services, ensuring that the most critical areas of care receive the necessary financial support.
Conclusion
This historic increase in Medi-Cal provider rates, underpinned by the MCO Tax and legislative support, marks a transformative step in California's healthcare system. By enhancing the compensation for health care providers, California is paving the way for improved access to quality health care for its most vulnerable populations, setting a precedent for other states to follow.
See Medi-Cal Targeted Provider Rate Increases and Investments for more information.
