DHCS to implement 10 percent Medi-Cal cuts in October 2013

Sat Aug 31 22:04:31 PDT 2013

August 30, 2013

DHCS to implement 10 percent Medi-Cal cuts in October 2013

California Medical Association

The Department of Health Care Services (DHCS) recently announced that it would begin to implement the 10 percent Medi-Cal physician payment rate reduction on October 1, 2013, for Medi-Cal managed care and on January 9, 2014, for fee for service (FFS). DHCS also announced that it would be retroactively implementing the cuts for FFS providers to June 1, 2011, when the law authorizing the cuts went into effect. 

DHCS said it will recoup a percentage of provider payments to recover overpaid funds during the retroactive period. These retroactive payment recoveries will not occur until after the prospective 10 percent payment reductions are implemented. In total, DHCS will retroactively recoup overpayments made over a period of 29 months.

Specialty physician services in Medi-Cal managed care will not be subject to a reduction. The California Medical Association (CMA) is working with the state to obtain additional information.

In March 2011, the California Legislature passed, and Governor Jerry Brown signed, AB 97, which included a 10 percent reimbursement rate cut for physicians, dentists, pharmacists and other Medi-Cal providers.

Shortly thereafter, CMA filed a lawsuit, CMA et al. v. Douglas et al., to stop the State of California from implementing the 10 percent cut included in the 2011-2012 state budget. The district court issued an injunction because the cuts would irreparably harm the millions of patients who rely on Medicare for health care.

In January 2013, a three-judge panel of the 9th Circuit Court of Appeals vacated the preliminary injunction, clearing the way for implementation of these rate reductions.

CMA and the other plaintiffs in the case (the California Hospital Association, California Pharmacists Association, National Association of Chain Drug Stores, California Association of Medical Product Suppliers, AIDS Healthcare Foundation and American Medical Response) are planning to file a request with the U.S. Supreme Court to reverse the Ninth Circuit decision.

These cuts could not come at a worse time, as California is poised to expand Medi-Cal to 1.4 million more Californians under federal health reform, and as the demand for physicians is expected to rise.

CMA is part of an unprecedented coalition of physicians, dentists, health care workers and hospitals that will continue working to stop the cuts. The coalition, called "We Care for California," includes the largest statewide organizations representing physicians, dentists, hospitals and health care workers, as well as health plans, first responders, caregivers and other health providers.

Even before the cuts, California's Medi-Cal provider payment rates are some of the lowest in the nation. Low reimbursement rates have driven many of California’s providers from the program. As a result, 56 percent of Medi-Cal patients report difficulty finding a doctor. If these cuts are not stopped, Medi-Cal will become nothing more than a broken promise of access to care. 

Bryan Sloane
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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