Legislature Passes MCO Tax Providing Historic Rate Increases for Medi-Cal Providers

Date:    June 28, 2023

To:       California Chapter, American College of Cardiology

Yesterday afternoon the Legislature passed the Managed Care Organization (MCO) Tax that will generate more than $19 billion for the state’s health infrastructure and increase Medi-Cal rate increases. The final step for this historic agreement is for the Governor to sign the legislation which is expected. In 2024, provider rates for primary care, maternity care, and non-specialty mental health services will be increased to at least 87.5% of Medicare.

Starting in 2025, more than $6 billion annually will be put into the Medi-Cal program and healthcare workforce in the following ways:

  • $1.38 billion for primary care rate increases;
  • $1.15 billion for specialty care rate increases;
    • It is unclear how these funds will be distributed amongst the various specialties. No details are included in the legislation, and those decisions will be done outside the legislative process.
  • $700 million to increase emergency department access including $200 million for emergency physicians;
  • $500 million for family planning and reproductive health care;
  • $600 million for behavioral health facilities including inpatient psychiatric beds;
  • $75 million to expand GME residency slots.

For more details, I have included the following link to the California Medical Association’s website https://www.cmadocs.org/mco/overview