Court ruling could cut California spending on Medi-Cal

By Maura Dolan and Chris Megerian

Los Angeles Times, December 13, 2012

A federal appeals court decided unanimously Thursday that California may cut reimbursements to doctors, pharmacies and others who serve the poor under Medi-Cal.

A three-judge panel of the 9th Circuit U.S. Court of Appeals overturned injunctions blocking the state from implementing a 2011 law that slashed Medi-Cal reimbursements by 10%. Medi-Cal, a version of Medicaid, serves low-income Californians.

The ruling could make it harder to find doctors for as many as 2 million new patients who could become eligible for Medi-Cal under President Obama’s healthcare law — a possible 25% expansion of the program. California already provides one of the lowest rates of reimbursement in the nation for medical services to the poor, and there is a shortage of doctors to serve those patients.

According to the California HealthCare Foundation, Medi-Cal patients already have difficulty finding doctors.

A foundation study published in July 2010 said 25% of physicians provided care to 80% of Medi-Cal patients.

Although 90% of physicians told the foundation they were accepting new patients, only 57% said they were taking on new Medi-Cal patients.,0,4784104,full.story


By Don McCanne, MD

One of the major defects in the Affordable Care Act is that it perpetuates and expands the Medicaid program – a welfare program for low-income individuals. Because of political anti-welfare bias, it is vulnerable to budget cuts that would not be tolerated in a program like Medicare that benefits all of us.

California’s Medicaid program, Medi-Cal, exemplifies this problem. It has one of the lowest payment rates in the nation, not even meeting the expenses of many of the physicians still willing to see these patients.

There are already over 7 million Californians on the program, and there will be almost a million children added as California shuts down its CHIP program (Medi-Cal pays less than CHIP). There will be about 2 million more individuals added in 2014 under the provisions of the Affordable Care Act. Further, low-income Medicare patients also eligible for Medi-Cal are being transferred into Medicaid managed care plans.

In spite of California being at the bottom in Medicaid payment rates, this 9th Circuit Court of Appeals decision upholds the additional 10 percent cut enacted because of California’s budget crisis. The reduction was challenged based on the fact that federal law requires that the state ensure that Medicaid patients have access to adequate health care services, and underpayment reduces the number of willing providers. That argument was rejected by the court, though it is difficult to see how California’s physicians will be able to care for over 10 million Medi-Cal patients when they are effectively donating their services plus subsidizing their losses resulting from overhead expenses that are greater than reimbursement rates. As more physicians turn them away, the crowd out of privately insured patients will threaten the solvency of the few remaining dedicated physicians.

This underpayment has real consequences. Access to primary care is impaired, and specialized services are especially difficult to obtain since most specialists are particularly resistant to allowing these patients in their practices, no matter how great the need. Outcomes for Medicaid patients are not as favorable as for those who have Medicare or private insurance. In some studies, the outcomes are as bad as the outcomes for the uninsured.

What good is a Medi-Cal card if it won’t provide access to health care?

If we had a single improved Medicare that covered everyone, this problem wouldn’t exist. Everyone would have the level of care that we should expect from a high-performance health care system. Are there too many politicians who still believe that we should offer only inferior health care to the poor because that is all they deserve? The rhetoric of the recent elections doesn’t bode well for a more egalitarian approach.

Re-posted with permission from