California's $1.9 Billion Budget "Miscalculation" in Medi-Cal Program Leads to Deficit

Governor Jerry Brown’s Administration admitted that they had “miscalculated” costs in the state’s Medi-Cal program last year, contributing to this year’s $1.6 billion deficit.

Department of Finance spokesman H.D. Palmer noted, “There’s no other way to describe this other than a straight up error in accounting, which we deeply regret.”

It was reported that the Administration discovered the accounting error sometime late last year, yet only recently reported it to lawmakers. Many observers were somewhat surprised to see the $1.6 billion deficit revealed during the Governor’s Budget unveiling weeks ago, in which the Governor called for approximately $3 billion in spending cuts, including scrapping the State’s Coordinated Care Initiative program.

Specifically, the Department of Finance concluded that it did not account for $487 million in rebates from drug manufacturers that the state must pay back to the federal government for its share of cost to the program.

The State also miscalculated the cost of the Coordinated Care Initiative program by double-counting some of the state savings to the tune of $913 million, and undercounted costs in San Mateo and Orange Counties to the tune of $573 million.

While the Governor has chosen to scrap the Coordinated Care Initiative due to the program not be “cost-effective,” the Administration has vowed maintain the majority of the key elements of the program, including CalMediConnect, the duals demonstration project, as well Managed Long-Term Services and Supports for Medi-Cal recepients in the state. The Administration is choosing to cancel the Memorandum of Expectation with the counties regarding the provisions of the program integrating In-Home Supportive Services into the program.

LeadingAge California will be closely monitoring the budget process and how the Administration handles the re-authorizations for CalMediConnect and Managed Long-Term Services and Supports.