Federal Officials Approve State’s Plan To Slash Medi-Cal Payments

On Thursday, CMS approved California's plan to cut reimbursement rates by 10% for a number of Medi-Cal providers, the Sacramento Bee reports. Medi-Cal is California's Medicaid program.

State officials have projected that the cuts will save $623 million.

Norman Williams, a spokesperson for the state Department of Health Care Services, said the cuts are retroactive to services provided since June 1 (Yamamura, Sacramento Bee, 10/28).

Details of Approved Cuts

According to DHCS, CMS has allowed the state to make a 10% cut to:

• Reimbursements to a number of providers and outpatient services, including clinics, dentists, laboratories, optometrists and pharmacists; and
• Freestanding nursing and adult subacute care facilities, as well as other nursing facilities (Pecquet, "Healthwatch," The Hill, 10/27).

Other Cuts Still Pending

Meanwhile, the Obama administration has not decided whether to approve California's proposals to:

• Require beneficiaries to pay $5 copayments for physician visits and $50 copays for emergency department visits; and
• Limit beneficiaries to seven physician visits annually.

State Withdraws Other Proposed Cuts

The state has withdrawn a request to cut Medi-Cal rates to hospitals and to children's medical providers after concluding that those reductions would hamper access to care (Gorman, Los Angeles Times, 10/28).

Response

California Medical Association CEO Dustin Corcoran said CMA will seek to block the cuts in federal court.

Heath care providers and patient advocates have argued that the cuts would cause more health care providers to stop treating Medi-Cal beneficiaries.

They also have said that the Obama administration could be jeopardizing the federal health reform law because the Medi-Cal system will be ill prepared to handle the large number of low-income patients who will become newly eligible for coverage (Sacramento Bee, 10/28).

Deputy CMS Administrator Cindy Mann said that CMS' decision gives California flexibility to address its budget shortfall but that the cuts "will have significant impact on affected providers" (Los Angeles Times, 10/28).

DHCS Director Toby Douglas said, "We are pleased that CMS has determined that these painful but necessary reductions comply with all federal access requirements."

He added that the state "will conduct ongoing monitoring and assessment of beneficiary access, thus ensuring they continue to receive essential health care services" ("Healthwatch," The Hill, 10/27).

For additional coverage on CMS' approval of the state's plan to cut Medi-Cal payments by 10%, see today's Capitol Desk post.