Leaders Push To Exempt Skilled Nursing From 10% Medi-Cal Cut

On Wednesday, state lawmakers, hospital leaders and labor unions rallied at the State Capitol in support of a bill (AB 900) that would stop a retroactive 10% cut to Medi-Cal reimbursements for hospital-based skilled nursing services, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 4/10).

Medi-Cal is California's Medicaid program.

Background on 10% Medi-Cal Cut

In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10%. The state Department of Health Care Services has estimated that the cut -- which would be retroactive to June 1, 2011 -- will save the state $431 million.

According to DHCS, the cut would apply 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.

The payment reduction is included in Gov. Jerry Brown's (D) fiscal year 2013-2014 budget proposal and comes as California prepares to expand Medi-Cal to individuals who earn up to 138% of the federal poverty level -- or $15,415 annually -- under the Affordable Care Act (California Healthline, 1/29).

Health care advocates have said that the cuts -- which are based on funding levels in fiscal year 2008-2009 -- would result in a 25% reduction to Medi-Cal services (Sacramento Business Journal, 4/10).

Details of the Bill

The bill, by Assembly member Luis Alejo (D-Salinas), would exempt hospital-based, acute-care skilled nursing facilities from the cut.

Jan Emerson-Shea -- vice president of external affairs for the California Hospital Association -- said hospital-based skilled nursing facilities were singled out because the cuts will affect them more than other Medi-Cal providers (Gorn, "Capitol Desk," California Healthline, 3/27).

The Assembly Health Committee has scheduled an April 30 hearing on the bill (Sacramento Business Journal, 4/10).

Comments From Bill's Supporters

Supporters of the bill -- including hospital leaders, labor unions and a bipartisan group of lawmakers -- have said that if the 10% cut is implemented, hospital-based skilled nursing facilities would be forced to close or reduce staff (Quinton, "KXJZ News," Capital Public Radio, 4/10).

In a news release, Alejo said, "For hospital skilled nursing facilities, retroactive implementation of these cuts would be catastrophic for patients and their families, health care workers, hospitals and the communities they serve."

Sen. Jim Nielsen (R-Gerber) said in the release, "We believe it will be less expensive to reverse these cuts and maintain services as they are today."

Nielsen added, "Without hospital-based skilled nursing care, patients will remain in acute care hospitals longer, adding greater costs to the health care system than the dollars 'saved' through the proposed cuts" (Sacramento Business Journal, 4/10).

For more details about how the Medi-Cal cut could affect skilled nursing facilities, see today's California Healthline feature.