REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  February  7, 2017
CATEGORY:  Consent - Health and Human Services-5.

SUBJECT:

Letter of Interest Intergovernmental Transfer

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Donnell Ewert, HHSA Director, (530) 245-6269

STAFF REPORT APPROVED BY:  Donnell Ewert, HHSA Director

RECOMMENDATION

Approve and authorize the Chairman to sign a Letter of Interest for the Fiscal Year 2015-16 and Fiscal Year 2016-17 Intergovernmental Transfer required to receive funding to assist in financing health improvements for Medi-Cal beneficiaries in Shasta County.

SUMMARY

Approval of the Letter of Interest (LOI) will confirm the interest of Shasta County Health and Human Services Agency (HHSA) in working with the Partnership HealthPlan of California (PHC) and California Department of Health Care Services (DHCS) to provide a Medi-Cal managed care rate range Intergovernmental Transfer (IGT). This is a non-binding letter, stating our interest in helping to finance health improvements for Medi-Cal beneficiaries in Shasta County.  In order for Shasta County to participate in the Fiscal Year (FY) 2015-16 and FY 2016-17 IGT, the LOI must be submitted to DHCS.

DISCUSSION

The IGT process is a funding strategy under Section 1903(w)(a) of the Social Security Act whereby states and/or local governments can utilize state or local funds to increase federal matching dollars for Medicaid programs. California currently receives a 50 percent match for services provided through Medi-Cal, the California Medicaid program. Currently, the State claims federal funds for use in the Medi-Cal system at a level that is less than the maximum allowable federal funding level. The difference between the maximum allowable federal funding level and the actual amount drawn down by the State is referred to as “headroom.” This “headroom” of unused federal reimbursement is available to be drawn down through an IGT by counties and other public entities covered by a Medi-Cal managed care plan.

PHC, a County Organized Health System, is the provider of managed health care services for low-income individuals and families eligible for Medi-Cal in Shasta County. The additional Medicaid funds must be used for the provision of health care services to Shasta County residents and cannot be transferred into the County’s General Fund. Per PHC policy, HHSA must use the additional federal Medicaid funds to improve behavioral health services, care coordination, oral health services, and/or access to specialty care for Medi-Cal beneficiaries.

For many years, California Counties covered by Medi-Cal managed care plans have had the opportunity to secure federal matching funds for their local health care expenditures on behalf of the Medi-Cal population. The mechanism for securing these funds involved an IGT, whereby the county transfers funds to DHCS, and DHCS then uses the funds to draw down additional federal funding from the federal Center for Medicare and Medicaid Services (CMS), which is then transferred to the Medi-Cal Managed Care health plan for that county. The Medi-Cal Managed Care health plan then makes payments to its contracted Medi-Cal providers which results in the county getting back the transferred funds, along with the matching federal funds that are contained in the Medi-Cal expenditures, less a 20 percent DHCS administration fee, managed care organization (MCO) taxes, and a three percent managed care plan administrative fee.

The revenues derived from the IGT must be spent on health care services. The proposed spending plan as well as agreements with DHCS and PHC will come to the Board of Supervisors at a later date.

ALTERNATIVES

The Board could choose not to approve the Letter of Interest.

OTHER AGENCY INVOLVEMENT

The recommendations have been reviewed by the County Administrative Office.

FINANCING

There is no funding currently associated with approval of this recommendation and therefore no additional General Fund impact.  In FY 2015-16, HHSA received a net amount of $2,238,113.97 (2013-14 IGT).  In FY 2016-17, HHSA received a net amount of $2,331,776 for 2014-15 IGT.  It is estimated that HHSA will receive up to $3,817,386 for each FY 2015-16 IGT and for 2016-17 IGT.