Officials Dispute Suggestion of ‘Wrong’ Estimate

Managed Risk Medical Insurance Board officials last week bristled at the suggestion that MRMIB somehow made a bad estimate of its budget that resulted in a $116 million general fund shortfall in the Healthy Families program. With an additional $216 million in federal money that hasn’t come to California because of the shortfall, the total deficit now amounts to $332 million, according to MRMIB executive director Janette Casillas.

Casillas, at a MRMIB board meeting last week, responded to state officials’ comments that the shortfall stemmed from a mistaken estimate for how much money would be needed for the Healthy Families program in 2013.

“Our forecasting and budget assumptions have been right on every time,” Casillas told the board. “But what has occurred here is not a challenge with budgeting or forecasting, but with the budget process itself. We know what we need, it’s not about making wrong assumptions.”

The real problem, Casillas said, was the state budget counted on money from  a tax on managed care organizations that has expired.

“This year’s state budget presumed the extension of the MCO tax,” Casillas said, “and when it did not go through, there were no actions to backfill those dollars.”

MRMIB, which oversees Healthy Families, has not been able to pay health plans for services provided since the end of December. Each month, that deficit has grown, and now the Legislature is considering a budget appropriation to replace that $116 million in general fund money, which would satisfy the $332 total deficit for 2013, Casillas said.

That assumes the transition of 860,000 children from Healthy Families to Medi-Cal managed care programs goes as scheduled, Casillas said. Any setbacks in timing could make that shortfall bigger, she said.

MRMIB board member Richard Figueroa told Casillas he appreciated the clarity she brought to the estimating process.

“We’ve tried to be good stewards of the state’s money, and good business partners with the state,” Figueroa said. “And unfortunately we find ourselves in this awkward position.”

Figueroa said it’s up to the Legislature and the governor to work out how the health plans get paid.

“People have been loathe to talk about the gorilla in the room,” Figueroa said. “That’s the MCO tax. And I’m certainly hopeful the Legislature and governor can reach some accommodation on this soon. We apologize to the plans for the situation we find ourselves in.”

Casillas said the health plans, so far, have been relatively forgiving.

“It is quite uncomfortable and the plans have been understanding, but they have bills to pay, and they provided services. And they want and need their payments,” Casillas said.

The Legislature did appropriate an extra $15 million this month, to bring the shortfall down to its current level, Casillas said.

“We acknowledge receipt of $15 million, and we appreciate that. We will begin shortly to make payments with that $15 million,” she said. “But the current shortfall is still at $116 million general fund, with another $216 million federal [dollars], so we’re still short $332 million.”