New report shows Medi-Cal expansion threatened by low reimbursement rates

June 10, 2016
Area(s) of Interest: Access to Care Payor Issues and Reimbursement 

A new report shows that while California’s Medi-Cal program has dramatically expanded its reach—now covering about one-third of the state's population—these gains are threatened by Medi-Cal’s low payments to physicians and other providers.

According to the study, published by the Bay Area Council Economic Institute, California's Medi-Cal reimbursement is near the bottom for all state Medicaid programs. In 2014, California ranked 47th in the nation in reimbursement rates for traditional fee-for-service Medi-Cal.

In 2011, Medi-Cal payment rates to physicians, hospitals, dentists and other providers were cut by 10 percent as a way to balance the state’s budget. Even before the cuts, California's Medi-Cal rates were abysmally low. Unfortunately, despite a much better fiscal outlook, physician payment rates have not been restored.

Medi-Cal has long been underfunded, resulting in decreased access to health care for patients and dangerously low reimbursement rates for participating physicians. Currently, payments to doctors for a typical office visit under Medi-Cal are roughly $16—far less than the cost of providing care.

“No physician, no care giver, should ever have to choose between providing care to those who need it and staying in business,” said Dustin Corcoran, CEO of the California Medical Association (CMA).

More than 13.3 million Californians—about one-third of the state’s population—are now covered by Medi-Cal. More than 5 million have gained coverage since the Affordable Care Act took effect, expanding eligibility for the program.

Currently, Medi-Cal serves 4.7 million people who hold full-time jobs. An additional 2.8 million children and teens enrolled in Medi-Cal live in households where at least one parent is working.

“People think this is a safety net program for people who aren’t working, but that just isn’t true anymore,” said Micah Weinberg, president of the San Francisco-based think tank.

The vast majority of working adults who gained Medi-Cal coverage were previously uninsured, holding jobs that didn’t offer health insurance. Being uninsured affected both their health and their productivity, said Larry Levitt, senior vice president at the Kaiser Family Foundation.

“These are low-wage workers, and the numbers just don’t add up for employers to provide them with job-based health benefits,” Levitt said. “Medi-Cal is filling a gap that the business community couldn’t fill themselves.”

A 2011 survey of over 1,500 Medi-Cal beneficiaries identified difficulties in finding coverage, with 34 percent of Medi-Cal beneficiaries saying it was difficult to find health care providers who accept their insurance, compared to 13 percent of people with other coverage.

CMA is a founding member of the “We Care for California” coalition, working to help state leaders understand how the severe underfunding of Medi-Cal harms millions of Californians, including children, seniors in nursing homes, pregnant women and people with disabilities, all of whom have difficulty getting access to the health care they need because of low Medi-Cal rates.

CMA is supporting two ballot measures this year that will provide billions of dollars for the Medi-Cal program. As part of the Save Lives California coalition, CMA is backing a life-saving tobacco tax initiative that would raise California’s tobacco tax, which is currently among the lowest in the country, to $2.87 a pack. This initiative will provide as much as $2 billion per year to fund California's health programs, including Medi-Cal.

CMA is also supporting the California Children’s Education and Health Care Protection Act, which will extend the temporary income tax provisions of Proposition 30 and provide up to $2 billion annually to improve access to health care for low-income children and their families.


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