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REPLY TO: MARTY OMOTO 

 martyomoto@rcip.com   website:   www.cdcan.us

 REPORT #092-2008  -  MAY 6, 2008 - TUESDAY

 

CALIFORNIA BUDGET CRISIS

* MEDI-CAL PROVIDER RATE CUT LAWSUIT FILED

* SEEKS TO BLOCK 10% RATE REDUCTION

* MAJOR IMPACT TO SENIORS, PEOPLE WITH DISABILITIES

 

SACRAMENTO (CDCAN)  - A coalition of Medi-Cal funded community-based providers who provide critical health services to millions of Californians, including children and adults with disabilities, the blind, low income seniors, filed a class action lawsuit to block the Governor's 10% rate reduction in Medi-Cal and Dental-Cal payments.  The permanent 10% rate reductions were proposed by the Governor in January and approved by the Legislature in February and are scheduled to effect on July 1, 2008, unless legal action stops it.  A court hearing is expected in the next 30 to 45 days.

 

The lawsuit is the second major suit filed to block the Medi-Cal cuts (a different lawsuit was filed also in Los Angeles earlier this month on behalf of persons receiving Medi-Cal. See CDCAN website for copy of that filing. A copy of the lawsuit filed yesterday will be on the CDCAN website tomorrow at www.cdcan.us)

 

Advocates have said that the Medi-Cal reductions - along with other reductions passed or proposed have enormous impact on rights of children and adults with disabilities, mental health needs and seniors to live in their homes and communities. 

 

Lawsuit Comes While Budget News Worsens

The lawsuit comes under the shadow of what many advocates and policymakers expect to be even more bad news on the State budget, when the Governor releases next week (on May 14th) revisions to his proposed 2008-2009 State Budget.  Advocates and policymakers, including Schwarzenegger Administration officials have warned in recent days of major - even massive - new cuts will likely be proposed covering a wide range of critical health and human service programs. 

 

The Governor and other state budget officials now predict a widening budget shortfall that could be over $20 billion. 

 

Class Action Lawsuit Filed By Coalition of Providers

The class action lawsuit seeks an immediate injunction to block the reduction in Medi-Cal payments. The suit was filed jointly by the California Medical Association (CMA); the California Hospital Association (CHA); the California Dental Association (CDA); the California Association for Adult Day Services (CAADS); the American College of Emergency Physicians, State Chapter of California (Cal/ACEP); the California Pharmacists Association (CPhA); and the California Association of Public Hospitals and Health Systems (CAPH).

 

 

* According to the complaint, the Medi-Cal provider rate reductions were enacted "solely due to state budgetary woes, without regard to the impact on the availability of Medi-Cal services."

* Such cuts are illegal, according to the complaint, and are "being imposed on a system already in crisis, wherein inadequate payment levels have resulted in a scarcity of willing providers, creating serious access hurdles for Medi-Cal beneficiaries."

* If the Medi-Cal provider rate cuts are allowed to take effect, according to the lawsuit, additional health care providers will withdraw from the Medi-Cal program, which in turn will lead "to additional crowding of hospital emergency departments."

* The lawsuit contends that under federal Medicaid law, the Secretary of the US Department of Health and Human Services (HHS) must approve the policies and methods used for setting payment rates and that such changes may not be implemented by the state prior to approval by the federal government.

* According to the complaint, California has yet to submit what is known as a State Plan Amendment (SPA) to the federal government, requesting approval of the reduced Medi-Cal rates.
* Additionally, federal regulations require the state to establish Medicaid payment rates for hospitals and other institutional providers through a public process that includes publishing the proposed rates and the methodologies and justifications used to establish those rates. The lawsuit claims that no such process took place before the 10% rate reduction was approved.

* The lawsuit charges that when it comes to Medi-Cal payments to doctors and other individual health care providers, "state law requires that Medi-Cal fee-for-service rates be adopted pursuant to the regulatory process and requires the Department of Health Care Services to annually review Medi-Cal rates for doctor and dental services, taking into account Consumer Price Index cost increases, reimbursement levels under Medicare and other third-party payors, prevailing customary charges and other factors."

* According to the lawsuit,  as with the cuts imposed upon hospitals,  no such regulatory process occurred before the rate reductions for physicians and other providers were approved.

 

Governor Proposed Reduction In January - Legislature Approved It In February

The Governor proposed the permanent 10% to the reimbursement rates paid to various providers participating in the Medi-Cal Program, and the Legislature approved in February 2008 (though moving the effective date from June 1, 2008 to July 1, 2008):reduction amounts to over $1.2 billion ($602.4 billion of that in State general funds - the remainder federal matching funds)

* All "fee for service" Medi-Cal providers (doctors, medical transportation, pharmacy, home health, dental, and other medical services)

* All Managed Care plans (except for those assisting persons transitioning from Agnews)

* Distinct-Part Nursing Homes (affiliated with acute care hospitals), Nursing Home (Level A), Adult Day Health Care providers, and certain other facility types.

Other major Medi-Cal proposed cuts are waiting final action by the Legislature.  The Legislature will wait to take final action on these and other major cuts to health and human services, education and other areas of the budget until after the Governor releases his revisions and changes to his proposed 2008-2009 State Budget on May 14.

 

The other major Medi-Cal proposed cuts include a proposal to permanently eliminate 11 Medi-Cal "optional benefits")

- called "optional benefits" because the federal government does not require the states to offer these services (except for those in a long term care facility which are:

* Chiropractor Services

* Incontinence Creams and Washes

* Acupuncture Services

* Adult Dental Services

* Speech Services

* Audiology Services

* Optometry Services

* Optician

* Optical Laboratory Services

* Podiatry Services

* Psychology Services.

 

Medicare Part B Payments for Dual Eligible Medi-Cal and Medicare Recipients

Another important proposed Medi-Cal cut that the Governor proposed in January is the elimination of Part B Premiums for certain low-income individuals to maintain their enrollment in the federal Medicare Program. The Legislature has not yet taken final action on this proposal. 

 

* The Governor estimated savings of $8.4 million (State general fund) if the proposal became effective in the current budget year, and another $100.2 million (State general funds) for the 2008-2009 State budget year that begins July 1, 2008. 

* Without these state paid premiums, these individuals (about 44,000)  who are primarily low income seniors, blind and people with disabilities will need to pay the monthly premium.
CDCAN Note: The state presently pays premiums of $93.50 per month for 44,000 "dual eligible" individuals (persons who are eligible for both Medi-Cal and Medicare) in order for them to receive Medicare Part B benefits. This has been done because it has saved money for the State because they used Medicare benefits when possible instead of Medi-Cal)

 

 

 

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