Medi-Cal Targeted Provider Rate Increases and Investments
Assembly Bill (AB) 119 (Chapter 13, Statutes of 2023) authorized a Managed Care Organization (MCO) Provider Tax effective April 1, 2023 through December 31, 2026. Subject to federal approval, MCO tax revenues will be used to support the Medi-Cal program including, but not limited to, new targeted provider rate increases and other investments that advance access, quality, and equity for Medi-Cal members and promote provider participation in the Medi-Cal program.
Pursuant to the 2023 Budget Act and AB 118 (Chapter 42, Statutes of 2023), DHCS implemented the first phase of Targeted Rate Increases effective January 1, 2024. Furthermore, DHCS has proposed additional rate increases effective in 2025 as part of the 2024-25 Governor's Budget.
Proposed Targeted Rate Increases Effective 2025
Pursuant to AB 118, DHCS proposed, as part of the 2024-25 Governor's Budget, a plan for targeted increases to Medi-Cal payments or other investments effective in 2025 in the following domains:
- Additional investments in primary care, obstetric care, and non-specialty mental health services
- Specialty care services
- Community or Hospital Outpatient Procedures and services
- Family Planning and women's health services
- Hospital-based emergency and emergency physician services
- Ground emergency transport services
- Designated Public Hospitals
- Behavioral health care for beneficiaries in hospital and institutional long-term care settings
- Investments to maintain and grow health care workforce
Medi-Cal Targeted Rate Increases 2024-25 Governor's Budget Policy Paper
The proposed 2025 rate increases are subject to obtaining all necessary legislative and federal approvals.
Targeted Rate Increases Effective January 1, 2024
Pursuant to Welfare & Institutions Code Section 14105.201 (added by AB 118) DHCS developed primary care, obstetric, and non-specialty mental health services targeted provider rate increases for providers in Medi-Cal effective for dates of service on or after January 1, 2024. These rate increase will apply to eligible providers in the Fee-For-Service delivery system, as well as eligible network providers contracted with Medi-Cal managed care plans. DHCS increased rates, as applicable, for targeted services to no less than 87.5% of the Medicare rate, inclusive of eliminating AB 97 provider payment reductions and incorporating applicable Proposition 56 supplemental payments into the base rate. DHCS calculated an equivalent rate increase for services that do not have a rate established by Medicare. DHCS received federal approval of the 2024 targeted rate increase in State Plan Amendment (SPA) 23-0035.
DHCS developed the code list through a review of existing Medi-Cal policies and procedures, review of current utilization data by provider taxonomy, review of literature, review by DHCS's staff medical consultants, and consultation with technical experts. DHCS reserves the right to modify the code list for purposes including, but not limited to, accounting for changes to coding and billing definitions, applying technical corrections or updates, and obtaining or maintaining any necessary federal approvals.
Eligible Providers
Procedure codes identified as Primary/General Care are proposed to be reimbursed at the increased rate if the service is billed using Health Insurance Claim Form (CMS-1500) and provided by an otherwise eligible provider in the below provider type categories:
- Physicians
- Physician Assistants
- Nurse Practitioners
- Podiatrists
- Certified Nurse Midwives
- Licensed Midwives
- Doula Providers
- Psychologists
- Licensed Professional Clinical Counselor
- Licensed Clinical Social Workers
- Marriage and Family Therapists
Other providers will continue to be reimbursed at the existing Medi-Cal rate for procedure codes identified as Primary/General Care.
Procedure codes identified as Obstetric and Non-Specialty Mental Health Services are proposed be reimbursed at the increased rate for all otherwise eligible providers.
Please see the notes on the Medi-Cal Targeted Provider Rate Increase Fee Schedule for further information regarding billing and eligibility restrictions.
Rate Information
CY 2024 TRI Fee Schedule v1.06.01082024
Additional Provider Information
DHCS hosted a webinar on December 19, 2023, to discuss targeted rate increases effective for dates of service on or after January 1, 2024. Please see the presentation materials, linked below, for additional information relevant to providers. DHCS will create an FAQ based on the questions and topics covered during the webinar.
December 19, 2023 Presentation Materials
Legislation & Resources
