Primary Care Medi-Cal Providers About To Be Hit by Double Rate-Cut Whammy

Primary care providers on Jan. 1 will have their Medi-Cal reimbursement rates lowered — twice on the same day.

A two-year Medicaid federal rate increase for primary care providers is due to expire on the first day of 2015. On the same day the California  Department of Health Care Services plans to implement its state-ordered 10% reduction in reimbursement rates for fee-for-service Medi-Cal primary care providers.

The federal payment bump elevated Medi-Cal primary care provider rates up to Medicare levels for 2013 and 2014. There has been little talk in Congress about extending the temporary rate hike past its Jan. 1, 2015 end date.

During the state budget crisis of 2011, the California Legislature voted to approve a 10% Medi-Cal provider rate cut (AB 97). The reduction was held up in court for two years, until June 2013. DHCS officials started implementing the reduction in phases, with the first phase in September 2013 affecting dental and medical transport services. Primary care fee-for-service reductions (as well as actuarial equivalent reductions in Medi-Cal managed care rates) starting in January are last on the list.

“Many of the physicians who have been able to continue seeing the state’s neediest and most vulnerable people may no longer be able to do so,” said Molly Weedn, associate vice president of public affairs for the California Medical Association.

In an email, Weedn said, “California continues to have one of the lowest Medicaid reimbursement rates in the nation, and as the temporary bump for primary care physicians expires it will be difficult for those doctors to continue taking on new patients and keep their doors open for business.”

California’s Medicaid reimbursement rates were among the lowest in the nation before the 10% state cutback about to be implemented.

The two-year federal bump in rates made a big difference to providers, said Carmela Castellano-Garcia, president and CEO of the California Primary Care Association.

“Cutting reimbursement rates will mean people will stop seeing Medi-Cal patients,” she said. “This is huge. We believe [the federal two-year bump] made a difference. We’re going to see the impact, now that we’re going to lose it.”

Primary care providers will not have to pay retroactively for “overpayments” that started when the law took effect in 2011. Earlier this year, the governor’s budget excluded retroactive payments.