Despite surplus, state budget slashes Medi-Cal rates

June 17, 2013

The California Legislature passed a $234-billion budget on Friday that will cut Medi-Cal payments to physicians and other providers by 10 percent. The cuts were originally passed as part of the 2011-2012 budget, but were held up in court as the California Medical Association (CMA) and other plaintiffs filed suit to stop the draconian cuts.

In January of this year, a three judge panel of the 9th Circuit court ruled that the state could move forward with the rate cuts, despite an earlier district court ruling that found that the cuts would irreparably harm the millions of patients who rely on Medi-Cal for health care. CMA and the other plaintiffs in the case had requested a rehearing from the full Ninth Circuit Court of Appeals, which was denied.

Although the state is in a much better financial situation than it was in 2011 when the cuts were first passed, the 2013-2014 budget includes roughly $1 billion in Medi-Cal provider rate cuts annually.

On Saturday, the California Legislature passed legislation (AB X1-1) that would expand Medi-Cal to more than 1.4 million state residents under the Affordable Care Act. The irony of slashing rates while promising coverage to more than a million new patients has not gone unnoticed. If the state moves forward with the cuts, particularly at a time when millions of new patients will be eligible for the program, access to care will be decimated in our state, undermining the success of federal health reform.

The budget does restore dental and mental health benefits under the Medi-Cal program.

The final agreement includes $206 million to improve mental health services, including $142 million in one-time general fund money; $51 million in non-general fund money in the coming fiscal year and about $150 million the following fiscal year to boost grants for CalWORKS, California's welfare-to-work program; and $16.9 million in general fund money in the coming fiscal year and $77 million the following fiscal year to help partially restore Denti-Cal benefits for adults. Denti-Cal is the Medi-Cal dental program.

Even before the cuts, California's Medi-Cal provider payment rates are some of the lowest in the nation. Low reimbursement rates have driven many of California’s providers from the program. 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.

“What good does it do our communities if they have health care coverage, but cannot get in to see a doctor?" said Senator Ricardo Lara, author of SB 640, one of two CMA-sponsored bills (along with AB 900, authored by Assemblyman Luis Alejo) that will stop the Medi-Cal cuts. "If we want healthy communities we need to provide access to quality and preventative care."

CMA has joined an unprecedented coalition of physicians, dentists, health care workers and hospitals that will continue working to stop the cuts. The coalition, called “We Care for California," includes the largest statewide organizations representing physicians, dentists, hospitals and health care workers, as well as health plans, first responders, caregivers and other health providers.

CMA and the We Care for California coalition will aggressively push for a solution to the provider cut before the end of session.

“Every provider in California’s vast health care delivery system unequivocally agrees with the simple notion that more Californians must have access to quality health care – when and where they need it – but that quality care is going to be less available and affordable in California if we continue to cut our system to the bone,” said Paul R. Phinney, M.D., CMA President.


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