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.
Targeted Rate Increases Effective 2025 & 2026
The 2024 Budget Act and Senate Bill (SB) 159 (Chapter 40, Statutes of 2024) authorize new targeted Medi-Cal provider rate increases from the MCO Tax effective January 1, 2025, and January 1, 2026. These investments are in addition to the increases for primary care, obstetric, and non-specialty mental health that became effective January 1, 2024.
Effective 2025:
- Emergency Department Physician Services
- Reproductive Health and Family Planning
- Community Health Workers
- Ground Emergency Medical Transportation
- Emergency Air Medical Transportation
- Community-Based Adult Services
- Congregate Living Health Facilities
- Pediatric Day Health Centers
Effective 2026:
- Additional increases for primary and specialty physician services
- Clinic Services and Supports
- Private Duty Nursing
- Non-Emergency Medical Transportation
The 2024 Budget Act also allocates funding to continuous Medi-Cal coverage for children until the age of five and one-time funding to strengthen and support the development and retention of the Medi-Cal workforce.
Pursuant to SB 159, if the MCO Tax initiative on the November 2024 ballot
(Proposition 35) is approved by the voters, the investments effective in 2025
and 2026 become inoperable, since both cannot be fiscally sustained.
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 increases will apply to eligible providers in the Fee-For-Service delivery system, as well as eligible network providers, as defined in All Plan Letter (APL) 19-001, 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
Targeted Rate Increase Provider Webinar
DHCS hosted a provider webinar on July 17, 2024, to outline the requirements necessary for the Medi-Cal managed care plans to implement the calendar year (CY) 2024 Targeted Provider Rate Increases program.
July 17, 2024 Presentation Materials Targeted Rate Increase Provider Webinar Slides
Contact DHCS
Legislation & Resources
