California Healthline Daily Edition

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Some California Providers Might Receive Waiver for 10% Medi-Cal Cut

Some Medi-Cal providers in California could receive waivers to avoid a 10% cut to reimbursement rates, HealthyCal reports.

Medi-Cal is California's Medicaid program (Richard, HealthyCal, 10/23).

Background on 10% Cut

In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10%. The cut is retroactive to June 1, 2011.

In December 2012, a three-judge panel of the 9th U.S. Circuit Court of Appeals overturned a district court ruling to stop the retroactive 10% cut. Health care providers asked the full 9th Circuit court to review the case. In May, the full circuit court upheld the cut.

In September, the California Medical Association petitioned the U.S. Supreme Court to review the federal court ruling.

Details of Reduction

The cut will start at $917 million for fiscal year 2013-2014 and one year later will increase to $1.4 billion.

H.D. Palmer -- a spokesperson for the California Department of Finance -- noted that payment reductions are up to 10%, rather than a flat 10% cut (California Healthline, 9/24).

The reduced payments took affect for dentists and medical transport workers on Sept. 5. The cut will take effect for:

  • Medical-supply companies on Thursday; and
  • Doctors, clinics and pharmacies on Jan. 9, 2014.

Details of Waivers

Tony Cava -- a spokesperson for the state Department of Health Care Services -- in an email said regulators will grant waivers in cases where the 10% cut could jeopardize access to treatment or medication for Medi-Cal beneficiaries.

For example, Sherri Cherman -- president and COO of Monrovia-based specialty pharmacy ModernHealth -- said that her company earns a "profit margin in single digits" and that the cut would force them to stop accepting Medi-Cal beneficiaries.

Jon Roth -- CEO of the California Pharmacists Association -- said several pharmacies across the state are in a similar situation.

"On the one hand, we're implementing the Affordable Care Act, and that means people getting insurance, about a million in Medi-Cal, and at the same time, we're reducing provider payments to a point where pharmacists, physicians, dentists, everybody are going to be leaving" the program, Roth said, adding, "From a health policy standpoint, that makes zero sense to me" (HealthyCal, 10/23). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.