Governor Newsom's 2021 May Revise Budget for Healthcare Industry

May Revise budget for healthcare industry

May Revise Budget for Healthcare Industry

California Governor Gavin Newsom announced a $267 billion budget proposal dubbed as California Comeback Plan for 2021-2022 on May 14, 2021. This May Revise budget, which is $40 billion higher than the one proposed in January, is considered the biggest economic package in Californian history. 

With the pandemic and the resulting economic downturn, this budget was greatly anticipated, especially for the healthcare industry. With most criticising the January budget for being historic and without precedent, the economic outlook of the May Revise looks more positive than the ones received by its predecessor. 

Here is what you can expect for the healthcare industry from the May Revision of the 2021-2022 California budget. 

1. Medi-Cal Expenditures

Medi-Cal is the state’s medicaid program, and the Governor Newsom’s budget aims to strengthen the health system for everyone. In 2021-22, Medi-Cal is anticipated to cover approximately 14.5 million Californians, which is about one-third of the Californian population. 

But due to the pandemic and its economic impacts, the caseload is expected to increase about 6.6 percent compared to last year. Thus the may Revise has increased the Medi-Cal budget to $115.6 billion for 2020-21 and $123.8 billion for 2021-22.
Key changes

• The May Revise expands the Medi-Cal services for the individuals aged 60 and above effective from May 1, 2022. This move is estimated to cover over 89,000 undocumented adults. Currently eligible individuals under 26 years of age, regardless of their immigration status, are provided complete Medi-Cal benefits by the state. 

• As per May Revise, the community health workers (CHW) are included in the class of health workers who can provide Medi-Cal covered services effective January 1, 2022. CHWs work directly with families and individuals with cultural or language barriers and thus have difficulty understanding health care workers.

• May Revise adds community-based Doula services as Medi-Cal benefit effective from January 1, 2022. Doula aims to reduce black infant and maternity mortality rates and in turn increase health equity for pregnant individuals and families. 

• Medi-Cal payment rates for audio-only telehealth are to be established and, in turn, continuing flexibilities available during the pandemic. Only the providers servicing recipients located in California or border communities and who can provide in-person services to each client served by audio-only telehealth are eligible to claim reimbursement for audio-only care. 

• A new federal option is to be pursued that allows the states to receive federal funding if they extend Medi-Cal eligibility from 60 days to 12 months for pregnancy-related and postpartum issues. This is effective from April 1, 2022 for up to 5 years. 

2. Office of Health Care Affordability

January’s proposal of the budget proposed an $11.2 million initial investment to create the office of Health Care Affordability, but this proposal is delayed for one year. Office of Health Care Affordability would have been responsible to contain health care costs and increasing transparency in medical services quality and cost. 

3. Covered California

The state reduced approximately $730 million from existing state affordability help in Covered California. This is one aspect of the May Revise that has greatly disappointed people who expected the state to reduce premiums and deductibles in Covered California. This move can increase the premiums of Covered California medical health insurance plans if the federal assistance is not made permanent. 

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