Another Arrow in the Quiver for Attempt To Reverse Medi-Cal Cut

The chant was long and loud and seemed like it would never stop: “Hey! Hey! What do you say! Stop the cuts right away!”

Marquesha Harris was one of an estimated 8,000 people who descended on Sacramento Tuesday for one of the biggest health care protests ever at the Capitol. She wasn’t up on the specific details of the provider rate cut at the center of the protest, but she was sure of one thing: There have been too many cuts to Medi-Cal, she said.

“It’s not fair … of all the things you could take money from, you’re going to cut it from Medi-Cal,” Harris said. “People need it. People need it to live.” Harris, a hospital worker in Fairfield, has a sister who is a Medi-Cal beneficiary.

The strength-in-numbers demonstration was orchestrated to exert pressure on state legislators and the governor to reverse a 10% cut in Medi-Cal reimbursements approved in 2011.

“That was when the state was in bad shape,” said Amy Denhart, director of public affairs for Planned Parenthood of the Pacific Southwest who came to the rally from San Diego.

“Now that the budget is back in the black, it’s time to reverse it,” Denhart said. “I mean, I see it right now, people are getting hurt now. What’s going to happen in 2014?”

Medi-Cal, California’s Medicaid program, is expected to add 1.5 million new beneficiaries next year through the Affordable Care Act.

Lower reimbursement rates will mean fewer doctors able to see Medi-Cal patients, according to Molly Weedn, director of media relations for the California Medical Association. She understands the exasperation felt by so many people in the provider community, sparked by some of the lowest Medi-Cal provider rates in the nation — even before the latest 10% reduction.

“We make the joke, and I guess it’s not that funny at this point,” Weedn said. “But it’s more expensive to get a large pizza delivered to your door than it is for Medi-Cal to pay for an office visit to a physician.”

Attempts To Reverse Cuts in Courts, Legislature

The Legislature in 2011, mired in a seemingly hopeless economic morass, ordered a 10% across-the-board reduction in Medi-Cal provider reimbursement rates. That move is worth an estimated $458 million in general fund savings to the state in fiscal year 2013-2014, according to H.D. Palmer of the Department of Finance. That number jumps to $725 million in general fund dollars when annualized, Palmer said.

Until now, cuts were in limbo awaiting court rulings in lawsuits challenging them. But that changed on May 24 when the Ninth Circuit U.S. Court of Appeals ruled that the Medi-Cal reduction was legal. Now the only legal avenue left is appeal to the U.S. Supreme Court.

Provider groups in late May filed a petition with the federal appellate court to ask for time to put together a case for the U.S. Supreme Court, according to Anne McLeod, senior vice president of health policy at the California Hospital Association.

“What we did is file a writ petition for the appellate court to postpone implementation of the cuts and stay the decision,” McLeod said. “That gives us time to file for certification for the U.S. Supreme Court.”

McLeod did not know when they’d hear back from the appellate court, let alone how long it might be before a case could be presented to the Supreme Court.

“It’s that important to us, and that important to providers,” she said. “We don’t want to leave any stone unturned.”

The latest stone provider groups turned over was a legislative one. At first, they pinned their hopes on two bills designed to reverse the 10% Medi-Cal reduction. One bill (SB 640) was shelved in the Senate Committee on Appropriations, and the other (AB 900) was narrowed to reverse cuts to only one kind of provider: distinct-part skilled nursing facilities.

Provider groups now hope to convince legislators to reverse the rate reductions by adding a provision to the Legislature’s budget revision. That could happen by mid-June, McLeod said.

“We fully expect it will become a part of these budget discussions,” McLeod said.

Pressure Mounting as Medi-Cal Expansion Nears

This week’s large, dramatic protest in Sacramento was designed to keep legislators focused on an issue that is going to be central to successful implementation of the ACA in 2014, said Don Crane, CEO of the California Association of Physician Groups.

“Here we’re having the expansion of Medi-Cal with another 1.5 million people added to Medi-Cal, creating an acute need for more capacity and access,” Crane said. “And this cut, if it goes into effect, will have a devastating impact.”

It has long been a fear in the medical community in California that low Medi-Cal reimbursement rates would either force providers to drop Medi-Cal patients or not accept new ones. That hasn’t really happened yet in California, Crane said. But that doesn’t mean it won’t happen, he added.

Introducing an even lower reimbursement rate in California is complicated by the fact that the reduction was passed in 2011 and held up in court for two years. Because of the delay, providers owe two years’ worth of a 10% cut, now that the court decided in favor of the state. California health officials have indicated they will try to create a soft landing for providers by spreading retroactive payments over four years. It means providers are facing an additional 5% reduction a year for four years, making it a 15% pay cut roughly through 2018 and then a 10% cut thereafter.

“Providers are right on the edge right now,” Crane said. “This cut, coupled with the claw-back, well, it would have to be one heck of a soft landing to make this work.”

Providers have lost money on Medi-Cal patients in the past and have made up for it with a cost shift, Crane said. “Providers make it up in commercial payers, and that’s particularly true in hospitals. They’ll take low-cost Medi-Cal patients and then charge a private patient 170% of cost, so they can meet the totality of their needs.”

But that cost shift is becoming much more difficult to pull off, he said. If health plans are told to take patients with pre-existing conditions and to provide essential health benefits, their costs go up, and that cost likely will be passed on, at least in part, to providers, Crane said.

“It hasn’t reduced access yet, but it will,” Crane said. “Already, some of the hospitals have talked about declining to take Medi-Cal patients even now.”

Budget Negotiation Seen as Critical

If cuts are enacted, Weedn predicted the problems will be most noticeable in 2014 after the Medi-Cal expansion begins.

“You’ll be able to see it most poignantly when patients come in for the first time” with their new Medi-Cal cards,” Weedn said. “Many docs will not be able to take on Medi-Cal patients, they just aren’t going to be able to take them.”

Providers are interested in making health care reform work, Weedn said, but there’s not much they can do if there’s so much financial disincentive to taking Medi-Cal patients.

“There is a growing amount of support from legislators, across the aisles,” she said. This week’s protest might help move that support to action, she said. “It’s important we stay unified as a voice. Just because that piece of legislation stalled, that doesn’t mean we’re not going to put up a fight,” Weedn said.

That means new legislation, budget fights and legal fights up to the Supreme Court, McLeod said.

“We can only take one path at a time, and see where things land,” she said. “This is too important not to pursue everything.”

Opponents of the cuts have some statistics on their side. A recent poll of 1,000 likely California voters commissioned by the We Care for California coalition found strong public support for Medi-Cal and strong opposition to Medi-Cal cuts. The survey found that 77% think the cuts will hurt the quality and availability of health care in the Medi-Cal program.

Support for Medi-Cal came from all corners and demographic slices of California, according to Amy Levin, vice president at the Benenson Strategy Group in Los Angeles.

“We saw overwhelming opposition to these cuts to Medi-Cal from every major demographic and geographic region,” Levin said. In fact, she said, only 9% of those polled were enrolled in Medi-Cal, far below the state average. “We were surprised, shocked really, that the intensity of the opposition was so high. You just don’t see numbers like this across all demographics.”

State Plans for Implementing Cuts

State officials await final word from the courts before they begin implementing cutbacks.

The Department of Health Care Services “is waiting for the Ninth Circuit to issue the mandate to the district court that will formally close the matter,” according to Norman Williams, deputy director of communications for DHCS. “That mandate should [be] issu[ed] soon, and then the department can move forward with implementation steps.”

That will take some time, Williams said.

“It will take the department between 60 to 90 days to implement prospective fee-for-service provider reduction changes,” Williams said, “and another eight months to make needed recoupment process changes.”

Cuts to the fee-for-service dental program can be implemented within two weeks of receiving the court mandate, Williams said.

“The department will have to make necessary system changes to reduce payments as appropriate for the various provider types currently covered by the injunction,” Williams said. “In addition, the department will be sure to publish provider bulletins in the near future to ensure impacted provider types are aware well in advance of any payments actually being reduced.”

Related Topics

Insight Medi-Cal