California Gov. Schwarzenegger Approves Medicaid Provider Payment Rate Cuts

Main Category: Medicare / Medicaid / SCHIP
Article Date: 21 Feb 2008 - 9:00 PDT

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California Gov. Arnold Schwarzenegger (R) on Saturday approved nearly $2.2 billion in state budget cuts over the next two years to address a projected $14.5 billion state budget deficit, the Sacramento Bee reports (Lin, Sacramento Bee, 2/17). The cuts aim to reduce state spending by $1 billion this fiscal year and by $1.2 billion in FY 2009 (Yi, San Francisco Chronicle, 2/16). The bills Schwarzenegger signed on Saturday will save about $544 million in Medi-Cal spending in FY 2008 through a 10% reduction in provider payment rates. Medi-Cal is the state's Medicaid program (Sheppard/Geissinger, Oakland Tribune, 2/16). Most of the FY 2009 savings also will come from the provider payment rate cuts, the San Francisco Chronicle reports.

The cuts are scheduled to take effect on July 1 -- a month later than Schwarzenegger proposed -- to give state lawmakers time to reinstate the higher Medi-Cal rate in next year's budget, according to the Chronicle (Yi, San Francisco Chronicle, 2/16). Democratic legislators said they hope the Medi-Cal cuts can be repealed if budget negotiations can produce an alternative, such as a tax increase, lease of the state lottery or other new sources for revenue (Mendel, San Diego Union-Tribune, 2/16).

The Los Angeles Times reports that the cuts approved on Saturday will not yield "lasting savings" because many simply delay payments for various programs until the next budget year (Halper, Los Angeles Times, 2/16). Other proposals to eliminate dental services, optical care and other optional services for adult Medi-Cal beneficiaries remain on the table (Lin, Sacramento Bee, 2/16).

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