California proposes Medi-Cal changes for $275M budget savings by 2028

In a recent meeting of the Assembly Budget Subcommittee No. 1 on Health, California lawmakers discussed significant budget proposals aimed at reforming Medi-Cal, the state's Medicaid program. The discussions highlighted various cost-saving measures that could impact healthcare access and services for millions of Californians.

One of the most notable proposals is the reinstatement of the Medi-Cal asset limit test, which would evaluate resources such as property when determining eligibility for the program. Set to take effect no sooner than January 1, 2026, this change is projected to save the state approximately $94 million in the budget year. The asset limit would be set at $2,000 for individuals and $3,000 for couples, potentially restricting access for some low-income residents.

Additionally, the subcommittee proposed the elimination of acupuncture as an optional benefit under Medi-Cal, which is expected to save $5.4 million in the budget year and $13.1 million in subsequent years. This decision raises concerns about the availability of alternative pain management options for Medi-Cal beneficiaries.

Another significant discussion centered on hospice services. The proposal to repeal existing statutes that prevent utilization management controls for outpatient hospice services aims to ensure that these services are used appropriately. This change could lead to an estimated savings of $25 million in the budget year and $50 million thereafter.

The subcommittee also addressed the medical loss ratio (MLR) for Medi-Cal managed care plans, proposing an increase from 85% to 90%. This means that a greater portion of funds allocated to these plans would be required to be spent on direct patient care, potentially resulting in $200 million in savings by the 2028-2029 fiscal year.

Other proposals included limiting payments for PACE providers and eliminating the Skilled Nursing Facility Workforce and Quality Incentive Program, which could save an additional $130 million. The meeting also discussed suspending a requirement for skilled nursing facilities to maintain backup power systems during outages until funding is secured.

These budget proposals reflect ongoing efforts to contain costs within California's healthcare system while raising questions about the potential impact on service availability for vulnerable populations. As the state navigates these changes, the implications for healthcare access and quality will be closely monitored by stakeholders and advocates alike.