CMA Capitol Insight: Jan. 5, 2015

January 05, 2015
Area(s) of Interest: Payor Issues and Reimbursement 

CMA Capitol Insight is a biweekly column by veteran journalist Anthony York, reporting on the inner workings of the state Legislature.




Hot Button Health Care



As lawmakers return to Sacramento this week, much is still to be decided about the future of health care reform. State legislators will deal with a number of hot-button issues in the first half of 2015, many of which will have dramatic impacts on California’s health care policy and potentially the future success of the Affordable Care Act.



It all begins on Monday when Gov. Jerry Brown gives his inaugural address, which will double as his State of the State speech. In typical Brown fashion, nothing radical is expected. He will trumpet his pet programs, including the high-speed rail program (more on that in a minute).



On Friday, Brown will unveil his state budget proposal for the 2015-16 budget year. The governor has promised to put forth a plan to deal with the booming retiree costs for California public employees.



Numbers released late last year show that the California Public Employees’ Retirement System (CalPERS), which is responsible for administering retirement benefits on behalf of 1.6 million people who work for, or are retired from, thousands of state and local governments and agencies, has an unfunded liability of more than $57 billion. Skyrocketing health care costs have added to this number, as have reductions in public workforces around the state. CalPERS estimates that within the next decade or so, the number of retirees will outnumber the number of employees paying into the system.



Brown’s executive secretary, Nancy McFadden, has said the governor will address this issue in his budget, which will be released on Friday.



On Tuesday, Brown heads to Fresno for a ceremonial groundbreaking on the first leg of California’s bullet train. Brown’s governorship has, in many ways, become marked by the bullet train. No single proposal has received so much opposition from such a variety of sources. But Brown has remained steadfast in his support for the project, which he thinks will help combat climate change and modernize the state’s transportation system.



And then there is health care. Brown’s budget is expected to show Medi-Cal enrollments approaching 11.5 million – about 30 percent of California’s overall population. The rolls have swollen thanks in large part to the federal expansion of Medi-Cal eligibility to single adults, and the state’s move of more than 900,000 children from Healthy Families into Medi-Cal.



And, yet, California’s reimbursement rates for those who treat Medi-Cal patients are among the lowest in the nation. That means an increasing number of doctors are refusing to treat Medi-Cal patients just as the system is exploding.



The issue of network adequacy is not new, and has been raised by the California Medical Association (CMA) and others for years. But this year, the problem is particularly acute.



Making matters worse is the fact that a two-year bump in the federal Medi-Cal reimbursement rate is set to expire, which could lower payments to doctors and others even more.



The current state budget continues a 10 percent cut in reimbursements to some health care providers, which has been offset by the higher federal rate. When that higher federal payment expires, health care advocates fear even more doctors will refuse to take new Medi-Cal patients.



Lawmakers are sure to make Medi-Cal rates an issue this year, but thus far, Brown has been resistant to any effort to increase rates for those who treat the poorest Californians. But failure to act could undermine Medi-Cal, which has become more important to the state’s health care delivery system under Brown’s policy direction and guidance.



Much has been made of the fight between Brown and his fellow Democrats over pressures to increase the safety net, which was pared back during the Great Recession. But no single issue may be more contentious, and more important, than the fight to maintain a vibrant and sustainable Medi-Cal network, which provides health care services to 30 percent of all Californians.



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