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DHCS outlines Medi-Cal budget pressures; seeks reappropriation for Medi-Cal Connect and civil-rights staffing
Summary
The Department of Health Care Services told the Senate subcommittee it is operating under a temporary $3.4 billion interim loan activated by the Department of Finance in March to support Medi‑Cal provider payments and will seek an additional $2.8 billion to cover projected shortfalls through the fiscal year.
Department of Health Care Services officials briefed the Senate subcommittee on several budget items tied to Medi‑Cal operations, including an ongoing cash-flow challenge, a request to reappropriate funds for the Medi‑Cal Connect population‑health-management platform, and proposals to add staff for civil-rights compliance and Medi‑Cal administrative activities targeted at justice‑involved populations.
DHCS told the committee that on March 4 the Department of Finance activated a $3.4 billion interim loan to make Medi‑Cal provider payments. DHCS indicated it will request an additional $2.8 billion consistent with the Governor’s budget to cover anticipated shortfalls through the fiscal year.
Medi‑Cal Connect reappropriation: DHCS requested reappropriation of up to $19.7 million in general fund authority to continue implementation contracts for the Medi‑Cal Connect population health management platform. The department said two of five user releases have launched, with a third release scheduled for July, and that reappropriated funds would support the prime vendor, risk‑stratification technical expertise and project support services required to deliver releases 3–5.
Civil‑rights workload: DHCS described a Civil Rights Office workload increase driven by litigation settlement obligations and new reporting requirements tied to managed‑care and county mental health plan complaints. The office reported a dramatic increase in complaint reviews between 2019 and 2022 and requested permanent positions to process increased reporting and oversight responsibilities.
Medi‑Cal administrative activities for justice‑involved individuals: DHCS is also seeking five permanent positions to develop and operate a Medicaid Administrative Activities claiming program related to AB 133, which authorizes limited pre‑release services up to 90 days before release from incarceration. The department emphasized that federal approvals and federal claiming requirements are necessary prerequisites for ongoing claiming and that the request will transition certain one‑time PATH funds into ongoing federal revenue streams where permitted.
Why it matters: The multi‑billion cash flow loan and associated supplemental request underscore short‑term fiscal pressure in the Medi‑Cal program and frame the broader debate over long‑term solvency and service continuity. Reappropriation of IT funds and civil‑rights staffing affect ongoing program modernization and compliance obligations, while the jail‑reentry administrative‑activities program seeks federal match for pre‑release services.
Follow-up: Senators sought additional fiscal detail on the $2.8 billion figure and asked about connections between federal changes, wage mandates and DHCS cash-flow projections. DHCS said the $2.8 billion is reconciled in the Governor’s budget and agreed to provide finer detail to staff. The Department of Finance confirmed the loan activation and said growth adjustments for the long-term realignment baseline are tied to realigned revenues (sales tax and vehicle license fees).
Ending: DHCS will return with more detailed reconciliations and implementation plans. Legislators indicated they expect written cost justification and timeline information before taking final action in the budget process.
