STAFF REPORT
Meeting Date:
September 22, 2026
CONSENT
16 SUBJECT: PARTICIPATION IN THE MEDI-CAL INTERGOVERNMENTAL TRANSFER RATE RANGE PROGRAM FOR CALENDAR YEAR 2025
RECOMMENDATION: It is recommended that the City Council:
1. Authorize the Mayor to execute the Health Plan-Provider Intergovernmental Transfer Rate Range Program Agreement with CalOptima Health for the City's participation in the Medi-Cal Intergovernmental Transfer Variable Rate Range Program for Calendar Year 2025; and
2. Find that the recommended action is not subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15060(c)(2) and 15060(c)(3), as it will not result in a direct or reasonably foreseeable physical change to the environment.
SUMMARY OF THE MATTER
The Medi-Cal Intergovernmental Transfer Variable Rate Range Program allows eligible governmental entities, including the Laguna Beach Fire Department, to leverage local funds to obtain federal Medi-Cal funding and recover a portion of otherwise unreimbursed costs associated with providing emergency ambulance services to Medi-Cal beneficiaries. In its first year of participation, the City received $340,488 in program payments against $143,706 in expenditures, resulting in net cost recovery of approximately $196,782.
Following the City's successful participation in the Calendar Year 2024 program, staff submitted to participate for the January 1 through December 31, 2025 service period and executed the required Intergovernmental Agreement with the California Department of Health Care Services (Attachment 2).
Under the agreement, the City will contribute an estimated $106,638 toward the non-federal share of MediCal managed care payments. The contribution is subject to a 20% DHCS administrative assessment of approximately $21,328, resulting in a total estimated City expenditure of $127,966. DHCS will use the City's contribution to obtain corresponding federal funding, which will be distributed through CalOptima Health.
The proposed CalOptima Health agreement (Attachment 1) represents the final agreement necessary to complete the City's participation for Calendar Year 2025 and establishes the terms for distributing the City's share of the resulting IGT Rate Increase payments. CalOptima Health will reimburse the City's initial contribution and distribute the City's applicable share of the remaining program funds, less a separate two percent administrative fee retained by CalOptima Health. Although the City's final payment cannot be determined until DHCS establishes the funding available for the program round, the Fiscal Year 2026-27 Adopted Budget estimates $295,000 in program revenue. Based on the City's Calendar Year 2024 experience, staff anticipates that participation will again result in a positive net financial return to the City and provide additional recovery of otherwise unreimbursed emergency ambulance service costs.
Funding for the City's estimated contribution and DHCS administrative assessment is included in the Fire Department's Fiscal Year 2026-27 Adopted Budget. Therefore, no additional appropriation or budget
PARTICIPATION IN THE MEDI-CAL INTERGOVERNMENTAL TRANSFER RATE RANGE PROGRAM FOR CALENDAR YEAR 2025
September 22, 2026
amendment is required. Staff recommends that the City Council authorize the Mayor to execute the CalOptima Health agreement to complete the City's participation in the Calendar Year 2025 program.
DISCUSSION
Background
The California Department of Health Care Services, in coordination with CalOptima Health, administers the Medi-Cal Intergovernmental Transfer Variable Rate Range Program. The program allows eligible governmental entities to voluntarily contribute local funds toward the non-federal share of Medi-Cal managed care payments. DHCS uses these contributions to obtain corresponding federal financial participation, which is distributed through participating Medi-Cal managed care plans.
The Laguna Beach Fire Department provides emergency ambulance transportation services to Medi-Cal beneficiaries; however, Medi-Cal reimbursement does not fully cover the City's cost of providing these services. Participation in the program provides the City an opportunity to recover a portion of these otherwise unreimbursed costs.
On September 23, 2025, the City Council adopted Resolution No. 25.076 approving the City's participation in the program for Calendar Year 2024 and authorizing the agreements and financial transactions necessary to participate.
Calendar Year 2025 Participation
Following the City's successful participation in the Calendar Year 2024 program, the City expressed its interest in participating for the January 1 through December 31, 2025 service period. The City subsequently executed Intergovernmental Agreement No. IGT-25-0015 with DHCS, which establishes the terms of the City's transfer of funds for the Calendar Year 2025 program.
Under the DHCS Agreement, the City will contribute an estimated $106,638 toward the non-federal share of Medi-Cal managed care payments. The estimated contribution is based on Medi-Cal member enrollment and is subject to reconciliation against actual enrollment for the 2025 service period. If reconciliation results in a higher required contribution, the City will be responsible for the additional amount; if the required contribution is lower, DHCS will return the unexpended funds to the City.
The City's contribution is also subject to a 20% DHCS administrative assessment fee. Based on the current estimated contribution, the assessment fee is approximately $21,328, resulting in a total estimated City expenditure of $127,966.
DHCS will use the City's contribution to obtain corresponding federal financial participation and distribute the resulting Medi-Cal managed care payments to CalOptima Health.
CalOptima Health Plan-Provider Agreement
As the final agreement necessary for the City's Calendar Year 2025 participation, CalOptima Health has provided the City with a Health Plan-Provider Intergovernmental Transfer Rate Range Program Agreement for City Council approval. The Agreement is effective September 1, 2026, and establishes the terms for
PARTICIPATION IN THE MEDI-CAL INTERGOVERNMENTAL TRANSFER RATE RANGE PROGRAM FOR CALENDAR YEAR 2025
September 22, 2026
distributing the City's applicable share of the IGT Rate Increase payments received by CalOptima Health from DHCS.
The two percent administrative fee under the CalOptima Health Agreement is separate from the 20% DHCS administrative assessment described above. The DHCS assessment applies to the City's initial IGT contribution, while CalOptima Health retains its two percent administrative fee from the IGT Rate Increase payments before distributing the City's applicable share.
Under the Agreement, CalOptima Health will reimburse the City's initial contribution and distribute the City's applicable share of the remaining IGT Rate Increase payments, less a two percent administrative fee retained by CalOptima Health. Payments received by the City compensate for emergency ambulance services provided to CalOptima Health Medi-Cal members between January 1 and December 31, 2025, and are to be used to offset costs exceeding the fee-for-service reimbursement received for those services.
FINANCIAL ANALYSIS
The City's estimated contribution for Calendar Year 2025 is $106,638. In addition, DHCS will assess a 20% administrative fee of approximately $21,328, resulting in a total estimated City expenditure of $127,966.
Funding for these expenditures is included in the Fire Department's adopted Fiscal Year 2026-27 Adopted Budget; therefore, no additional appropriation or budget amendment is required. The City’s Fiscal Year 2026-27 Adopted Budget estimates $295,000 in revenue for this program.
In return, the City will receive reimbursement of its initial contribution, along with its share of the additional IGT Rate Increase funding, less a two (2) percent administrative fee retained by CalOptima Health. The total amount of funding available through the program is determined by DHCS and may vary by program round; therefore, the City's exact cost recovery for Calendar Year 2025 cannot be determined at this time.
However, in Calendar Year 2024, the City's first year of participation, the City received $340,488 in total payments against $143,706 in program expenditures, resulting in net cost recovery of approximately $196,782. Revenues received through the program will offset otherwise unreimbursed costs associated with providing emergency ambulance services to Medi-Cal beneficiaries.
ENVIRONMENTAL ANALYSIS
The recommended action is not subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15060(c)(2) and 15060(c)(3). Specifically, the action will not result in a direct or reasonably foreseeable indirect physical change to the environment and does not constitute a project as defined under CEQA. The action consists of approving an agreement related to the City's participation in the Medi-Cal IGT VRRP and does not involve construction or physical improvements.
ATTACHMENTS
1. Health Plan-Provider Intergovernmental Transfer Rate Range Program Agreement with CalOptima Health
2. Intergovernmental Agreement No. IGT-25-0015 Regarding Transfer of Public Funds with the California Department of Health Care Services
PARTICIPATION IN THE MEDI-CAL INTERGOVERNMENTAL TRANSFER RATE RANGE PROGRAM FOR CALENDAR YEAR 2025
September 22, 2026
Submitted By:
. Approved: .David A Kiff
Niko King, Fire Chief Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Kirsten Gallacher, Senior Administrative
Analyst