California Coalition To File Lawsuit To Stop 10% Reduction In Medicaid Provider Payments

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Medical Malpractice / Litigation
Article Date: 26 Mar 2008 - 11:00 PDT

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San Francisco Mayor Gavin Newsom on Tuesday is expected to announce that a coalition of local governments and health care providers plans to file a lawsuit seeking to roll back a 10% reduction in Medi-Cal payments to physicians that the state Legislature approved in February, the Los Angeles Times reports. Medi-Cal is California's Medicaid program. The rate reduction is scheduled to take effect this summer, and officials say the cut will save the state more than $500 million annually.

The state Legislative Analyst's Office had advised against the cut, saying it would lead to physicians dropping out of the program, which would force people to seek more costly treatment in hospital emergency departments. In addition, the Times reports that the state would lose hundreds of millions of dollars in matching federal funds for Medi-Cal.

Some clinics say they have either stopped accepting new Medi-Cal beneficiaries or plan to do so soon because of low reimbursement rates. Health care experts say that if the cut takes effect, other costs to taxpayers will increase by more than what the state will save in Medi-Cal reimbursements.

Gov. Arnold Schwarzenegger (R) administration officials said the cut is not intended as a long-term solution, but it is a better option than dropping hundreds of thousands of beneficiaries from the program and limiting services that the program covers (Halper, Los Angeles Times, 3/24).

Treatment Delays
In related news, delays in Medi-Cal treatment approvals are affecting beneficiaries' abilities to receive needed services, the Sacramento Bee reports. Stan Rosenstein, chief deputy director at the state Department of Health Care Services, said that the program aims to approve treatment requests within a day but said that a high demand for services has resulted in delays of up to 10 days in some cases.

Some providers are providing beneficiaries prescription drugs and equipment at no cost, but there is no guarantee that they will be reimbursed later. In some cases, beneficiaries are being denied needed drugs because required authorizations have not yet been received, the Bee reports.

The 10% cut in Medicaid provider payments is expected to contribute to the problem, as is an expected one-month delay in reimbursements this summer, according to the Bee (Griffith, Sacramento Bee, 3/23).

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