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California among six states that pay the least for Medicaid beneficiaries, says GAO report



July 21, 2014

According to a report released this week by the U.S. Government Accountability Office (GAO), California is one of six states that spends less than $6,000 per Medicaid (Medi-Cal in California) enrollee per year. The other states include Illinois Alabama, Arkansas, Mississippi and Tennessee. In contrast the report found that eight states, including New York, spend at least $10,500 per beneficiary. The report also found that Medi-Cal fee-for-service pays on average 61 percent of what private insurers in the state pay for the same evaluation and management services, with Medi-Cal managed care paying only 65 percent. These numbers underscore California's dismally low Medi-Cal rates and the need to increase rates, especially with millions of new patients now eligible for Medi-Cal under the Affordable Care Act's Medicaid expansion. 


Despite having some of the lowest numbers, California continues to move forward with a 10 percent Medi-Cal rate cut, passed by the legislature in 2011. The California Medical Association (CMA) immediately filed a lawsuit seeking to stop the cuts. Though cuts were enjoined for two years while the case was making its way through the court system,  the 9th Circuit Court of Appeals cleared the way for implementation of these rate reductions in 2013. In September 2013, CMA filed a petition with the United States Supreme Court, asking them to review the appeals court ruling. The court decided not to take up the case.


With 8.5 million beneficiaries estimated to be eligible for the Medi-Cal program this year, or a third of the state’s population, California cannot continue to add millions of people to Medi-Cal and simultaneously cut the resources available to that program.


The cuts to reimbursement rates were made when California was facing much more dire fiscal times. With the state's budget in the black for the first time since 2007, the state no longer needs to be balancing the budget on the backs of our poorest and most vulnerable patients. CMA is aggressively urging the legislature and the Governor to restore the 10 percent cut should be restored, ensuring those patients have timely access to quality medical care.


CMA is part of an unprecedented coalition of physicians, dentists, health care workers, community clinics, emergency responders and hospitals that maintain a commitment to reversing the cuts. The coalition, called “We Care for California," hosted the largest health care rally in Sacramento history last year, brining 8,000 providers, health care workers and patients to the state’s Capitol to advocate against the cuts.


Under the ACA, more than 3 million patients are expected to enter Medi-Cal over the course of the next two years. “As the rest of the nation looks to California for an example of health reform success, we simply cannot move forward with a 10 percent prospective cut to the Medi-Cal program while simultaneously adding new patients to the program," says CMA President Richard Thorp, M.D. “CMA and our stakeholder partners will look toward reforms that will result in real access to care so that health reform is more than an empty promise of an insurance card."


As this new GAO study confirms, California's Medi-Cal provider payment rates were among the lowest in the nation even before the cuts. Low reimbursement rates have forced many of California’s providers to stop seeing Medi-Cal patients. As a result, 56 percent of Medi-Cal patients report difficulty finding a doctor. If these cuts are not stopped, Medi-Cal will become nothing more than a broken promise of access to care.

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