Bill Aims To Reverse 10% Provider Rate Reduction

Assembly member Luis Alejo (D-Salinas) yesterday said he wants to undo the 10% Medi-Cal provider reimbursement rate cut passed by the Legislature in 2011. The across-the-board reductions were challenged in a lawsuit still pending in federal court and have not taken effect.

California lawmakers in 2011 faced a huge budget shortfall, and this particular cut was made to save the state an estimated $50 million a month, health officials say. Physicians and other providers of Medi-Cal services have been leery of this further reduction, when California already ranks near the bottom in the nation in Medicaid reimbursement rates.

Alejo said he will expand AB 900 — a bill originally designed to reverse rate reductions to one small group of providers — to include all providers affected by the 2011 cut. That includes physicians, pharmacists, hospitals and ambulance services, he said.

“We want to really take a step back and look at the 10% cut to all providers,” Alejo said. “Medi-Cal providers in California already have some of the lowest rates in the country. We are ranked 47th in the nation right now, even before that cut.”

If the 10% cut goes through, he said, the small pool of providers who currently accept Medi-Cal beneficiaries is going to dry up to the size of a puddle at a time when the state is expanding Medi-Cal coverage and signing up millions more through Covered California, the state’s health benefit exchange.

“In the light of needing to expand Medi-Cal coverage, it just doesn’t make sense to cut rates to providers at the same time,” Alejo said. “I don’t want to make an empty promise to California’s poor by having more coverage but making it less likely that providers will care for them.”

The new language in the bill, which originally was aimed at providing relief for acute-care hospital skilled nursing facilities, is not yet complete, he said. It should be done within a week.

It’s a bit of a political gamble for the original target of the legislation —  distinct-care skilled nursing facilities — if the newly expanded legislation fails. But according to Jan Emerson-Shea, vice president of external affairs for the California Hospital Association, the concern is much larger than the cuts to acute-care hospitals.

“The California Hospital Association appreciates Luis Alejo’s strong leadership and support for reversing draconian retroactive cuts to hospital-based skilled nursing facilities,” Emerson-Shea said. “Along with SEIU-UHW (Service Workers International Union and United Hospital Workers), patients, their families and local governments, a statewide coalition will continue to make the case for reversing the [Medi-Cal] cuts. We continue to work closely with the coalition and legislators to protect these specialized vital health care services.”

The California Hospital Association, along with the California Medical Association and other organizations, filed suit in federal court to halt California’s Medi-Cal cuts.

Alejo said he will gauge public and lawmakers’ support for reversing the rate cuts. He said he can scale down the legislation, if that’s necessary.

“It’s a larger picture than just skilled nursing,” Alejo said, “and in our budget system, there’s room to negotiate. This gives us more options, rather than starting at a narrow area, we can start with … the entire picture across the board, and then narrow it, if we need to, as we go forward.”

Alejo made it clear, though, that the larger cuts facing that subset of skilled-nursing facilities — roughly 35% cuts, rather than the 10% cuts faced by all other providers — are still of paramount importance to him.

“My number one priority in this bill is to the skilled nursing facilities. We need to get those cuts reversed and restored above everything else,” Alejo said. “But we have time to do the work, and build a consensus. Our goal here is to solve problems. My goal is to solve this problem, and if we can help other providers along the way, that would be good.”

AB 900 is scheduled to be heard Apr. 30 in the Assembly Committee on Health.