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Cuts to Calif. Medicaid could hurt reform, providers say

Health providers and advocates for the poor say they are worried that California's cuts to its Medicaid program Medi-Cal will hamper the state's ability to expand and improve healthcare under President Barack Obama's overhaul.

A federal appeals court backed California's right to cut payments by 10%, saving the state more than $330 million a year. An attorney representing a group of pharmacies said they would appeal next week.

Doctors, pharmacies and advocates for the poor say health providers could stop participating in the insurance program for the poor and disabled because the state's payments are already low. Advocates also said it runs counter to the promises of health reform to expand and improve healthcare.

"I think the question here is, when we expand it, is it actually going to serve the people who need it," said Vanessa Cajina of the Western Center on Law and Poverty, which advocates for the poor.Chris Perrone, a deputy director at the California HealthCare Foundation, a not-for-profit health policy group, said California already has very low payment rates compared to other states, and some findings suggest that access is already poor. One study found that California reimburses primary care physicians an average of 53% of Medicare, the federal healthcare program for seniors, he said.

According to the state Department of Health Care Services, Medi-Cal pays $24 for a 15-minute visit to the doctor's office. By comparison, Medicare would pay roughly $70.

Some Democratic lawmakers want the state to rescind the cuts approved last year. At the time it was passed, AB 97 was projected to save $660 million, with half the savings going to the state's general fund.

"We're now in a much different environment than we were when we first made those cuts, so given the opportunity, I would like to see those restored," said Sen. Ed Hernandez, a Democrat from Baldwin Park and chair of the Senate Health Committee.

The federal healthcare law seeks to increase health coverage by 2014 by creating new online insurance markets for individuals and small businesses to shop for subsidized private coverage, and by expanding Medicaid for low-income people. Medicaid is known as Medi-Cal in California and currently serves 7.7 million adults and children.

Gov. Jerry Brown has not said whether California will commit to fully expanding its Medi-Cal program to take advantage of federal funding. Under an expansion, Medi-Cal would cover people up to 138 percent of the federal poverty line, or about $15,400 for an individual.

It's estimated such a move would add between 1 million and 1.4 million people to Medi-Cal. The state is also in the process of moving 900,000 kids from the children's health insurance program known as Healthy Families to Medi-Cal.

"The court decision does not change the state's commitment to ensure access to healthcare for Medi-Cal members in a manner that fully complies with federal and state law," said Norman Williams, a spokesman for the state Department of Health Care Services.

More than 400 hospitals and about 130,000 doctors, pharmacists, dentists, and other health care providers participate in the Medi-Cal program. However, the state doesn't track whether some of them have stopped accepting new Medi-Cal patients or limit the number of patients they take.

"If you're going to set payment standards for pharmacies and for the other providers which are below their cost, and they won't provide services, then all those millions of people coming into Obamacare in California are going to get third-world medicine," said Lynn S. Carman, an attorney for a group of pharmacies.

Carman said his group intends to file an appeal next week seeking to be heard by the full court, not just the three-member panel in the 9th U.S. Circuit Court of Appeals that ruled Thursday.

Molly Weedn, a spokeswoman for the California Medical Association, which represents 35,000 doctors, said it's expected that the 10% cut won't take effect while health providers pursue their legal challenge. But Brown's finance officials have indicated the state expects to see additional savings by having the cut applied retroactively to June 2011.

The doctors group warned that if the cut is upheld, many physicians will have little option but to stop taking qualified patients because the reimbursements do not meet the cost of overhead and supplies to treat them.

Faced with multibillion budget deficits in recent years, the state Legislature already approved a series of Medi-Cal benefits cuts, some of which are still awaiting federal approval. For example, the state has cut dental care for adults and weeded out services such as podiatry, psychiatry and optometry.

Health reform does bring a glimmer of hope to California's low reimbursement rates. Primary care providers are expected to receive a temporary two-year payment boost under the federal health care law to match Medicare rates.

But California will only get the boost if it maintains its current rates, said Anthony Wright, executive director of Health Access California, a group that lobbies for healthcare for the poor.
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