May 10, 2024 Re: Legislative Report #348 – Governor Releases May Revise Budget Proposal – Steals $6.7 Billion from MCO Tax to Address Budget Deficit


This morning the Governor announced his May revise budget proposal to address a budget deficit of more than $47 billion. For Medi-Cal providers the May revise was especially devastating. As we have discussed, an MCO tax was signed last year that was to provide more than $1 billion a year to increase specialty physician Medi-Cal reimbursement rates to at least 87.5% of Medicare. The MCO Tax was also to provide additional funds to increase other Medi-Cal provider rates. These increases had been included in the Governor’s January budget proposal. In the May revise, released this morning, the Governor is proposing to take all the money for 2025, roughly $6.7 billion, and use it to help balance the deficit.


This is extremely disappointing as the provider community had been anxiously anticipating these increases to help create better access to care for Made-Cal patients.

The Legislature will now hold hearings to review the May revise proposal. The Legislature has until June 15th to pass a budget and the Governor will have until July 1st to sign a budget. There will be strong pushback from the provider community on the stealing of the MCO funds. The challenge for the Legislature will be if they want to make changes to the Governor’s proposal they will need to find other areas to cut.


It is important to note the taking of the MCO tax funds would be for 2025. As you may know, the California Medical Association is pursuing a ballot measure in November 2024 that would protect those MCO Tax funds from allowing the Governor or Legislature use them for other purposes than increasing Medi-Cal provider rates. If passed, the initiative would direct those MCO Tax funds towards provider rate increases starting in 2026.


I expect to hear more from CMA about their initiative and will share as I get that information



Tim Madden

Madden Quinonez Advocacy

cell – 916 284-4317