San Francisco Marin Medical Society Blog

Governor Brown’s 2015-16 Revised Budget Proposal and Its Impact on Health Care



Governor Brown released a revised budget proposal for fiscal year 2015-16, commonly referred to as the “May Revise.

The budget revision includes an increase in overall expenditures from the General Fund to $115.3 billion, an increase of approximately $2 billion (.06% increase) from his January proposal. Total proposed spending for the budget year is projected to be $169 billion, taking into account federal and special fund sources.

Medi-Cal

The Governor’s revised Budget contains no significant increases to Medi-Cal provider reimbursement rates. SFMS/CMA and other stakeholders have continued to point out major deficiencies in the Medi-Cal program, most notably the serious challenges that many Medi-Cal beneficiaries have accessing care.

Despite these concerns, the Governor is proposing an additional $200 million to provide full-scope Medi-Cal coverage, In-Home Supportive Services, and other benefits for the individuals who are covered by President Obama’s executive orders relating to certain undocumented immigrants. Under existing California law, an individual who is lawfully present in the state is entitled to certain health and social services. The May Revise assumes the legal challenges surrounding the President’s actions will ultimately be unsuccessful and sets aside an additional $200 million for this purpose.

The Governor is now estimating that the Medi-Cal program will serve 12.4 million people, an increase of 200,000 people since January. The May Revise assumes a $2.9 billion increase to provide coverage for Medi-Cal beneficiaries under the mandatory expansion, which would be split evenly between the state and the federal government under the traditional Medicaid financing structure. The May Revise also includes costs of $14 billion for the “optional expansion” – adults without children and parents/caretakers with incomes up to 138% of the federal poverty level. However, this population is financed entirely by the federal government until the 2016-17 fiscal year.

The Governor’s May Revise includes $341 million to cover increased mental health and substance use disorder benefits available to Medi-Cal enrollees. 

Controlled Substance Utilization Review and Evaluation System (CURES)

The administration is proposing an appropriation of $1.1 million to fund five positions for the ongoing maintenance and operations of the CURES prescription drug monitoring database. In January, SFMS/CMA urged the Legislature to continue its oversight over the CURES upgrade to ensure that the project is completed in a timely fashion and that the Department of Justice has adequate staff resources to, in a timely manner, enroll the thousands of licensees now required to apply to CURES by January 1, 2016.

High-cost Drugs

The January Budget proposal reserved $300 million to pay for several new drugs for Hepatitis C for individuals in the Medi-Cal Program, the AIDS Drug Assistance Program, inmates in state prisons, and patients in state hospitals. In the May Revise, the Budget allocates $228 million of that $300 million to the Department of Health Care Services, the Department of State Hospitals, and the Department of Corrections and Rehabilitation. Additionally, the State will convene two workgroups: one to examine high-cost drugs that are pending federal approval and how they could affect existing clinical guidelines, and another procurement workgroup that will examine pharmacy benefit manager contracts, drug pricing information, and the ability to negotiate prices and rebates.

Next Steps

The Legislature is constitutionally required to pass a balanced budget by June 15, leaving the Governor until June 30 to sign, veto, or approve the Budget with reduced expenditures (line-item veto). Both houses of the Legislature will continue to hold committee hearings on the various proposals and assumptions contained in the May Revision. Meanwhile, the Legislative leaders will begin negotiation on some of the major aspects of the Budget directly with the Governor and his administration. CMA has put several hundred hours into our advocacy surrounding Medi-Cal reimbursement rates and will ramp up those advocacy efforts over the next month.

Click here to view the 106-page May Revise. 

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