REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim City Manager
VIA: Scott M. Haberle, Fire Chief
PREPARED BY: Jeff Lopez, Fire Division Chief Bonnie To, Principal Management Analyst
Subject:
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Approve and authorize execution of an agreement between the California Department of Health Care Services (DHCS) and City of Huntington Beach; Approve and authorize execution of a Health Plan-Provider Agreement - Intergovernmental Transfer Rate Range Program Agreement between CalOptima Health and the City of Huntington Beach; Authorize designated City staff to execute the agreements; and, Approve an appropriation of $468,843 for the agreements during FY 2024/25
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Statement of Issue:
City Council is requested to approve and authorize execution of an agreement between the California Department of Health Care Services (DHCS) and City of Huntington Beach to participate in the Voluntary Rate Range Intergovernmental Transfer Program (VRRP IGT) to help recover unreimbursed City costs for service to CalOptima patients. City Council is also requested to approve an authorize execution of a Health Plan-Provider Agreement - Intergovernmental Transfer Rate Range Program Agreement between CalOptima Health and the City of Huntington Beach.
Last year, when the HBFD first participated in this VRRP IGT, the City of Huntington Beach’s net revenue from this program was approximately $3,243,360. For this year, the City of Huntington Beach’s net revenue from this VRRP IGT is estimated to be $3,868,980, which is an increase of approximately $625,620.
City Council is requested to designate and authorize the City Manager, Chief Financial Officer, and/or Fire Chief to sign the agreements to obtain funding as stated in the two agreements and approve an appropriation of $468,843.
Financial Impact:
Funding in the amount of $2,282,450 has been included in the FY 2024/25 Budget for participation in the program, based on the FY 2023/24 payment amount. An appropriation of $468,843 is requested to business unit 10065403 to provide sufficient funding for the FY 2024/25 upfront payment amount.
With this agreement and Huntington Beach’s payment of $2,751,293, it is anticipated that an estimated $6,620,273 in funds will be distributed to Huntington Beach, resulting in a net revenue of approximately $3,868,980 for additional reimbursement of Medi-Cal Managed Care services that were incurred and unreimbursed for the service period of January 1, 2023 through December 31, 2023.
Recommended Action:
recommendation
A) Approve and authorize execution of an agreement between the California Department of Health Care Services (DHCS) and City of Huntington Beach;
B) Approve and authorize Mayor and City Clerk to execute the Health Plan-Provider Agreement - Intergovernmental Transfer Rate Range Program Agreement between CalOptima Health and City of Huntington Beach;
C) Authorize the designation of the City Manager, Chief Financial Officer, and/or Fire Chief to execute the agreements; and
D) Approve an appropriation of $468,843 to business unit 10065403 for the agreements during FY 24/25.
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Alternative Action(s):
Do not approve the recommended action(s), and direct staff accordingly.
Analysis:
In March of 2023, the Fire Department and Finance Department reached out to CalOptima to inquire about our potential participation in their Voluntary Rate Range Intergovernmental Transfer Program (VRRP IGT) to help recover unreimbursed City costs for service to CalOptima patients. During FY 22/23, the City was notified of eligibility to participate in the VRRP IGT and notified again this fiscal year.
Per the CalOptima Health Board of Directors Regular Meeting Minutes, dated September 7, 2023:
The Voluntary Rate Range IGT program allows DHCS and CalOptima Health to secure additional Medi-Cal dollars for eligible Orange County entities. For each IGT transaction, DHCS identifies the estimated member months for rate categories (e.g., adult, adult optional expansion, child, long term care, seniors and persons with disabilities, and whole child model) and provides the total amount available for Orange County to contribute through funding entities. To receive funds, entities provide a dollar amount to DHCS, which is then used to obtain a federal match. DHCS distributes the funds and the match to the eligible entities through CalOptima Health.
The City’s ongoing participation in the program is dependent on available federal funding for the program and the City’s ability to provide the upfront contribution required. The contribution and net revenue received annually by the City is also dependent on other factors, such as the number of program participants in the County and number of Medi-Cal calls for service.
The City of Newport Beach and the City of Orange have participated in the VRRP IGT for over five years and have received net revenue. Other entities eligible for this year’s VRRP IGT through CalOptima include: First 5 Orange County, Orange County Health Care Agency, and UCI Health.
If City Council approves the recommended actions, the agreement with DHCS would require an upfront payment of $2,751,293. Once paid, an estimated $6,620,273 will be disbursed to Huntington Beach within approximately 60 days through CalOptima, for a net revenue of approximately $3,868,980. The 60-day time estimate is based on the actual transfer dates of previous years’ VRRP IGT. The required upfront payment and subsequent disbursement from CalOptima are calculated below and are based on Medi-Cal managed care services provided by the City during the January 1, 2023-December 31, 2023 period:
$2,292,744 Estimated Contribution (Non-Federal Share) that Huntington Beach Pays
+ $ 458,549 20% DHCS Fee that Huntington Beach Pays
$2,751,293 Total Amount that Huntington Beach Pays (New Appropriations Request)
$6,620,273 Estimated Disbursement to Huntington Beach after CalOptima’s 2% Share
- $2,751,293 Total Amount that Huntington Beach Pays
$3,868,980 Estimated Net Revenue that Huntington Beach Receives (98% Share)
The agreement is required to be executed on or before September 16, 2024 per DHCS. The upfront payment of up to $2,751,293 from Huntington Beach to DHCS is due by November 22, 2204.
The amount the City initially transfers shall be calculated using the Estimated Member Months (refer to Exhibit 1 in IGT Agreement Regarding Transfer of Public Funds with DHCS), which will be reconciled to actual enrollment for the service period of January 1, 2023 through December 31, 2023 using actual enrollment figures taken from DHCS records. Enrollment reconciliation will occur on an ongoing basis as updated figures are made available. If, after the enrollment reconciliation, there is an increase to the amount needed to fund the nonfederal share, the City will be required to transfer additional funds to cover the difference. If, after the reenrollment reconciliation there is a decrease to the amount needed to fund the nonfederal share, the City can choose to receive the additional funds from DHCS. If mutually agreed upon by DHCS and the City, amounts due to or owed by City may be offset against future transfers. Actual enrollment figures for this IGT capitation rate period will be considered final two years after December 31, 2023.
In addition, the City of Huntington Beach would need to sign a separate agreement (attached) with CalOptima regarding the payment of the estimated $6,620,273 from CalOptima to Huntington Beach.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Strategic Plan Goal:
Goal 2 - Fiscal Stability, Strategy A - Consider new revenue sources and opportunities to support the City's priority initiatives and projects.
For details, visit www.huntingtonbeachca.gov/strategicplan <http://www.huntingtonbeachca.gov/strategicplan>.
Attachment(s):
1. Agreement between the California Department of Health Care Services (DHCS) and City of Huntington Beach
2. Agreement between CalOptima Health and the City of Huntington Beach
3. PowerPoint