Healthcare Business News

More hurdles for Calif. Medicaid pay bump

By Andis Robeznieks
Posted: January 14, 2013 - 11:45 am ET

Over the past several weeks, California physicians received some good news from the federal government, some bad news from their state government and now perhaps some even worse news from Sacramento.

The news involves Medicaid payment increases, delays in receiving those increases and the potential for a decrease in pay.

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The good news came early November in the form of the CMS' final rule on implementation of the Patient Protection and Affordable Care Act's Medicaid primary-care payment parity provision. The measure provides federal funding to boost payment for some primary-care services provided by family doctors, internists and pediatricians (or a related subspecialty) to the same level as Medicare reimbursement for two years.

The law called for the pay increase to be effective Jan. 1. But, according to the California Medical Association, physicians have no idea when they'll see the extra money from Medi-Cal, the state's Medicaid program. First, California's Department of Health Care Services will have to submit a “State Plan Amendment” detailing its plan to implement the pay increase, and then get federal approval for the plan. After approval and implementation, retroactive payments will be issued.

“We don't know how long it will take to implement,” said Lisa Folberg, CMA vice president of medical and regulatory policy, adding that the DHCS told the CMA it won't happen “at least until summer.”

Folberg said primary-care physicians on Medi-Cal's fee-for-service plan get paid between $18 and $24 for an office visit and this does not cover their expenses. She said the Affordable Care Act's 2014 Medicaid expansion is expected to bring into the state's healthcare system some 2 million previously uninsured patients whose care may not be affordable for physicians to provide.

Under Medicare, the payments are much higher. According to the California Medical Association, a level 3 office visit (for a “moderate” level of service with an established patient), Medicare pays $54.09 in the Alameda/Contra Costa region (which includes Oakland and Berkeley), and $52.23 for the Los Angeles area.

The DHCS said the delay should not cause doctors to leave Medi-Cal.

“Implementing the Affordable Care Act's primary-care rate increase is a priority project for the Department of Health Care Services, and we are working quickly to update system requirements and obtain federal approval of the State Plan Amendment,” read an e-mail statement from the DHCS. “Since the payment increase will be retroactive to January 1, 2013, any delay in implementing the payment increase is not expected to impact a provider's willingness to continue serving Medi-Cal members.”

But Folberg said the CMA's disappointment in the late payment is enhanced by the frustration it creates.

“It's been one hit after another for physicians—and this was kind of a beacon in the fog for California healthcare providers,” she said, adding that the delay is reducing the positive effect of the increase. One bit of good news, Folberg said, is that doctors have been told that they will not have to resubmit claims to get the retroactive payments.

In contrast to the politically divisive issue of Medicaid expansion, Dr. Jeffrey Cain, president of the American Academy of Family Physicians, said his organization hasn't heard of any states that are not moving forward on Medicaid parity implementation plans.

States have until March 31 to submit plans, and the CMS has 90 days to respond, Cain said, adding that it's the AAFP's understanding that the “worst-case scenario” is for the entire process to take six months. When the increase is set to expire in two years, Cain said the AAFP will be advocating for its extension.

“To expand Medicaid without raising rates would be like giving everyone a bus ticket and not having enough buses,” he said.

Now, however, the CMA is concerned that—not only will it take too long for rates to go up—they may even go down in the meantime. This is because, in an effort to deal with budget constraints, the state passed a 10% payment reduction in 2011. The reduction never went into place as the CMA and other healthcare organizations successfully sued for an injunction in federal district court. Last month, however, a three-judge panel of the Ninth Circuit Court of Appeals lifted the injunction.

In the budget proposal submitted by California Gov. Jerry Brown on Jan. 10 it appears as though he intends to pay Medi-Cal providers at the lower rate. “The 2013-14 proposed budget assumes savings from the implementation of the 10% provider rate reductions that were enacted in 2011 but blocked by court action,” an e-mail from the DHCS communications office said.

In a separate e-mail, the DHCS explained the impact on the budget.

“DHCS was prevented from implementing many of the reductions due to court injunctions,” the e-mail said. “The budget assumes positive resolution of the court injunctions in March 2013 instead of summer 2012, resulting in General Fund costs of $261 million in 2012-13 and savings of $431 million in 2013-14.”

The CMA predicted the increased number of Medi-Cal patients will now have fewer physicians available to see them.

“Actions like this will assuredly force physicians out the Medi-Cal program,” Dr. Paul Phinney, CMA president, said in a news release.

“To us, it doesn't add up,” said CMA spokeswoman Molly Weedn, adding that the CMA will pursue legal action to keep the decrease-blocking injunction in place.

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