Earlier this month, Governor Gavin Newsom signed historic budget legislation that renews the state’s Managed Care Organization (MCO) Tax and provides the first meaningful investment California has made in Medi-Cal access in more than two decades.

Pursuant to the legislation, the California Department of Health Care Services (DHCS) has released its proposed list of provider codes for phase 1, which will take effect January 1, 2024.

Phase 1 will increase Medi-Cal provider rates to at least 87.5% of Medicare for primary care, maternity care and non-specialty mental health services. The increases will also eliminate the remaining AB 97 provider reductions of the 2011-12 state budget, which the California Medical Association (CMA) has long advocated to undo. Much of the funding for the Medi-Cal rate increases will come from the reinstatement of the MCO Tax, which unlike previous MCO taxes will be invested in the Medi-Cal system. Additionally, the 2024 base rate increases use of Proposition 56 funds to build what had been supplemental payments into the base rate, eliminating the need to submit requests for supplemental payments. 

Phase 2 of the Medi-Cal rate increases will start in 2025, when there will be over $6 billion from MCO tax revenue dedicated to Medi-Cal primary and specialty care and the overall health care system.

DHCS’ proposed list of January 1, 2024, changes to the Current Procedural Terminology (CPT) codes can be found here. The goal is to improve access and equity for Medi-Cal enrollees and make it possible for physicians and other providers to see more Medi-Cal patients.

CMA has been working over the past few months to ensure this generational opportunity to make critical and meaningful investments in the Medi-Cal system is realized, and will continue this work as implementation continues.