With Strong Equity Focus, California Budget Proposes Office of Health Care Affordability
California Gov. Gavin Newsom’s proposed $227 billion budget for 2021-22 includes establishing an Office of Health Care Affordability and a system to better use health data to improve health outcomes and address health equity. It calls on the state’s Medicaid program to manage member risk and need through whole person care approaches and addressing social determinants of health.
The budget includes $11.2 million in 2021-22, $24.5 million in 2022-23, and $27.3 million in 2023-24 and ongoing funding from the Health Data and Planning Fund to establish the Office of Health Care Affordability. This Office will be charged with increasing transparency on cost and quality, developing cost targets for the healthcare industry, enforcing compliance through financial penalties, and filling gaps in market oversight of transactions that may adversely impact market competition, prices, quality, access, and the total cost of care. In addition to lowering costs, the Office will promote healthcare workforce stability and training needs, report quality performance and equity metrics on the entire healthcare system, advance payment models that reward high-quality, cost-efficient care, and promote investments in primary care and behavioral health.
The Newsom Administration will submit a proposal in the spring recasting the Office of Statewide Health Planning and Development and the proposed Office of Health Care Affordability under the umbrella of a Department of Health Care Affordability and Infrastructure. The Department will be the dedicated entity within state government with subject matter expertise on healthcare affordability and infrastructure.
Renewed focus on health information exchange
The Newsom Administration wants to accelerate the use and integration of health information exchanges, as part of a network that receives and integrates health data for all Californians. The building and operation of a network of exchanges will leverage existing investments in health information exchange and look for additional federal funding in alignment with federal interoperability rules.
The budget document says it “envisions” an environment where health plans, hospitals, medical groups, testing laboratories, and nursing facilities—at a minimum, as a condition of participating in state health programs such as Medi-Cal, Covered California and CalPERS—contribute to, access, exchange, and make available data through the network of health information exchanges for every person.
Improving health equity
The COVID-19 pandemic has exposed long-standing health inequities seen among people of color. The pandemic has also highlighted systemic racism and discrimination that has created social, economic, and health inequities contributing to disproportionately higher infection and mortality rates for both chronic and infectious diseases; and COVID-19 incidence has been disproportionate in Black, Latinx, and Pacific Islander populations. The higher prevalence of underlying health conditions such as diabetes, obesity, and hypertension among communities of color increases the likelihood of more severe outcomes.
In response, California was the first state in the nation to implement a health equity metric as part of the Blueprint for a Safer Economy framework. The equity metric requires counties to demonstrate an improvement in COVID-19 test positivity rates in neighborhoods facing the most severe impacts. Addressing differential infection rates in disadvantaged communities is critical to safely reopening California's economy, the budget document notes, adding that the budget builds on efforts to address the need for a more culturally and linguistically competent and responsive health and social services system. The budget proposes the following initiatives expressly addressing health inequities:
• Health Plan Equity and Quality Standards: This spring, the Administration will propose an investment for the Department of Managed Health Care, in collaboration with other entities, to establish a priority set of standard quality measures for full service and behavioral health plans, including quality and health equity benchmark standards, and to take enforcement actions against non‑compliant health plans.
• Improving Equity Through Managed Care Plan Reprocurements: As Medi-Cal and Covered California managed care plan contracts come up for renewal, the Administration will work to include a focus on health disparities and cultural and language competency through health plan contractual language with a framework similar to the Blueprint equity metric.
• Analysis of COVID-19 Impacts: The budget includes $1.7 million General Fund in 2021-22 and $154,000 General Fund in 2022-23 and ongoing funds for the California Health and Human Services Agency to conduct an analysis of the intersection of COVID-19, health disparities, and health equity to help inform any future response.
• Community Navigators: The budget includes $5.3 million ($3.2 million General Fund) for the Department of Developmental Services to contract with family resource centers to implement a navigator model statewide. The navigator model would utilize parents of individuals in the regional center system to provide education on resources, advocacy, and mentorship to other parents of individuals being served by the regional center system. The purpose of navigators is to increase service authorization and utilization in diverse communities, furthering health equity within the developmental services system. Funding includes resources for a one-time independent evaluation focused on improving the effectiveness of existing disparity projects. The budget also provides funding for the Health and Human Services Agency to further reorient the administration of its programs through the use of data and the development of an equity dashboard.
Launch of CalAIM
Although it was delayed a year due to the pandemic, the Newsom Administration plans to launch its Medicaid reform program, California Advancing and Innovating Medi-Cal (CalAIM), in January 2022.
The budget includes $1.1 billion ($531.9 million General Fund) in 2021-22 for CalAIM, growing to $1.5 billion ($755.5 million General Fund) in 2023-24.
CalAIM seeks to build on the successes of waiver demonstrations such as Whole Person Care, the Coordinated Care Initiative, and public hospital system delivery transformation. CalAIM will leverage Medicaid as a tool to help address many of the complex challenges facing California’s most vulnerable residents, such as homelessness, insufficient behavioral healthcare access, children with complex medical conditions, the growing number of justice-involved populations who have significant clinical needs, and the growing aging population.
CalAIM proposes to provide a wider array of services and supports for patients with complex and high needs. It will seek to identify and manage member risk and need through whole person care approaches and addressing social determinants of health.
It also will seek to improve quality outcomes, reduce health disparities, and drive delivery system transformation and innovation through value-based initiatives, modernization of systems, and payment reform. Transformation of the delivery system is necessary to improve outcomes for Medi-Cal beneficiaries as well as to achieve long-term cost avoidance.
Now the California state legislature is starting to work through the proposals.
