California Cuts Medicaid Payments to Doctors

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The federal government has given California permission to cut its payments to physicians treating Medicaid patients by 10 percent.

Says Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services, the action gives California the flexibility it had requested to address its budget shortfall. “We know that the reductions that are being approved today will have significant impact on affected providers, and we regret the very difficult budget circumstances that have led to their implementation,” she said.

Due to the partnership between the federal and state governments which funds state Medicaid programs, states are not permitted to make major changes without approval from the Department of Health & Human Services.

California already spends less per Medicaid beneficiary than any state in the nation, resulting in approximately 50 percent of California physicians currently refusing to see lower income patients due to insufficient payment rates from the state’s safety net program. The further cuts, which will save the state some $673 million dollars, is likely to reduce that number dramatically, resulting in a severe decrease in medical care availability to the state’s poor.

And it may not end there.

The CMS is still considering a request by the California program to raise the amount of co-pays Medi-Cal beneficiaries must pay while limiting the number of times a beneficiary can see a doctor in a given year.

According to Dustin Corcoran, CEO of The California Medical Association, physicians in the state could now receive as little as $11 a visit for Medicaid patients in the state. “You can’t pay bills at these rates. They are unconscionably low.” Corcoran may well be right. According to a California physician I spoke with this morning, the newly installed rates will likely not even pay for the cost of employing someone to prepare and submit the payment claim to the Medi-Cal office.

With this precedent now set, expect many other states to make similar requests to cut their payment rates in Medicaid. With that in mind, Corcoran added:

They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation,” he said. “We have a hard time seeing how healthcare reform has a chance of being successful in the state of California after these cuts are implemented.”

He’s got a point there.


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