A service of the California Health Care Foundation

Medi-Cal Cuts Undermining Senior Programs, Facilities, Advocates Say

The irony of the situation was not lost on Linda Trowbridge, CEO of the Center for Elders’ Independence in Oakland.

At an Assembly hearing in Sacramento last week, Trowbridge said funding for California’s Program of All-Inclusive Care for the Elderly — or PACE — has been systematically cut over the past six years and yet it is often cited as the model of care the state would like to pursue.

The federally subsidized program is aimed at providing and coordinating care to allow seniors and people with disabilities to remain living at home.

“Everybody who is in this program would otherwise be in a skilled nursing facility,” Trowbridge said. The program saves the state money, she said, pointing to estimates that PACE centers cost 11% of what it would cost to have people go to nursing facilities. Ironically, the PACE program is one of the state’s models for its Coordinated Care Initiative for dual eligibles, Trowbridge said.

“It is an integrated system that CCI is modeled on today,” Trowbridge said.

PACE centers are having a tough time maintaining the same level of service with fewer dollars, she said. The most recent reduction — a 10% Medi-Cal reimbursement cut passed by the Legislature in 2011 that started to go into effect at the end of last year — is the most crippling, Trowbridge said.

An Assembly bill introduced last month aims to reverse the 10% cut to Medi-Cal, California’s Medicaid program. Whether or not AB 1805 by Assembly member Nancy Skinner (D-Berkeley) is approved, the governor and the state’s Department of Health Care Services have the discretion to exempt specific providers from the cut. They have exempted several types of providers in order to maintain access to care, but the state feels disinclined to exempt many more of them, according to DHCS Director Toby Douglas.

“We have continued to refine our reductions,” Douglas said. “But at this point, we don’t see any need to make any further changes to legislators’ decision on the 10% reduction.”

Advocates for seniors and the disabled think the need is critical, though.

Adult day health care is another type of service for seniors and the disabled, who are at risk of being institutionalized.

“Adult day health care is essentially skilled nursing care in a community setting,” said Debbie Toth, executive director of Rehabilitation Services of Northern California in Pleasant Hill. “Same staffing, same therapy. And this Medi-Cal rate reduction threatens our whole industry.”

“We have had 50 centers close during [the past two years] and in that time, about 16% of our industry has been wiped out,” Toth said. “Our situation is a little more dire in that we have five centers that in two months will close if that rate is not restored.”

Toth said the rate reduction has affected access to services, and that will only intensify over time.

“People will lose services. One of the arguments the department has made is that people will still have access to services and that this has not caused an access issue, but it has caused an access issue,” Toth said.

Douglas said state officials will keep tabs on the situation.

“As we continue to move forward,” Douglas said, “we will continue to monitor access, looking at it through many dimensions.”

California Among Lowest in Medicaid Reimbursement

California is among the lowest in the nation in Medicaid payments to providers, according to a 2009 study funded by the California HealthCare Foundation, which publishes California Healthline. The low ranking in that study was two years before the 10% cut was approved and more than four years before it began to take effect.

The access picture is bigger than just rates, though, Douglas said.

“Clearly rates are one of many important components,” he said. “But there are many other pieces of the puzzle — particularly in California, where 70% of the Medi-Cal patients are in Medi-Cal managed care.”

In managed care, Douglas said, the situation is a little different. “What we see in our plans, they don’t pay fee-for-service rates,” he said. “In terms of monitoring, it’s not just about providers, it’s also about utilization. … These are all factors we look at.”

Nathan Allen, an OB-GYN physician in Sacramento, had a different view. As a graduate of UC-Davis School of Medicine three decades ago, he said, “It was impressed on me then, the need for community service.” He set up practice in an underserved area of Sacramento called Del Paso Heights, and said he sees primarily Medi-Cal patients there.

“I’ve dedicated my life to this. But I had to close my office in Del Paso Heights because of the reimbursement rate reduction,” Allen said.

“Physicians like me are going to go out of business because we can’t afford to continue doing what we’ve dedicated our lives to be doing,” he said.

Assembly member Shirley Weber (D-San Diego), chair of the Assembly budget subcommittee on health and human services, said the arithmetic seemed simple to her.

“People should be able to break even, or even be able to make a little bit more,” Weber said. “We shouldn’t have people going into poverty to serve the poor.”

What is now an access problem could become an access crisis, she said, once an estimated two million Californians are added to Medi-Cal ranks in the near future.

“Clearly we can’t keep adding people to our rolls and not have the physicians they need,” Weber said. “I hear too many stories that tell me they can’t stay in business with what we pay. If you’re in business, you have to add and subtract, and you have to have enough to cover the people you serve.”

Impacts to Other Services

From durable medical supplies to emergency transportation to children’s hospitals and the centers of care for seniors and the disabled, the impacts of the rate reduction have been severe, stakeholders said. They include:

  • Emergency transportation: Emergency transportation businesses need to deal with the rate cut while continuing the same level of service, said Bill Barnaby, head of government relations for the California Medical Transportation Association. “With the [10% provider] rate cuts that have been in effect … there has been no relaxation of standard of care.”
  • Pediatric services: “Although the provider cuts did largely exempt pediatric services, there are some exceptions to that rule and some negative impacts,” said Bernadette Arellano, director of government relations for the California Children’s Hospital Association. She said Children’s Hospital of Central California has estimated its home health program will lose $1.8 million a year “and possibly endanger the continued existence of that very important program.”
  • Medical products: Amin Casey — regional vice president of New Motion, a medical product supplier — said custom wheelchairs and other equipment will be much harder to find. “There are less than a dozen providers left in the state to provide this kind of specialty equipment,” Casey said. “The 10% cut is making some of this equipment impossible to supply. We’re unable to recover our costs for these products.”
  • Reproductive services: Clinics can’t be expected to keep treating Medi-Cal patients and just absorb another 10% cut, said Paul Neprath, legislative advocate for Planned Parenthood. “Bottom line, it comes down to the rates,” he said. “The 10% rate [reduction] is really devastating.”
  • Oral health services: Dental care has also been dramatically affected by the rate reduction, according to John Blake, dental director of the not-for-profit Children’s Dental Health Clinic in Long Beach. “We’re at the breaking point,” Blake said. “We’ve had cuts over the years, but the 10% rate cut just about did us in.” Blake said his center stays afloat because of donations and fundraising, which is not necessarily a sustainable model. Other Medi-Cal dental providers around the area have closed up shop, he said. “We’re all that’s left,” Blake said. “Maybe we’re the only ones stupid enough to take Medi-Cal, but we’re trying to make it work for the patients we see.”

Categories: Insight, Medi-Cal