Physicians Face Medi-Cal HMO Termination
Unless They Accept 5% Cut to Contracts
CMA to File Suit to Halt State from
Reducing Already Low Physician Payments
[Posted 10/30/03]

The 2003-2004 budget, which reduces Medi-Cal physician reimbursements by 5 percent, also authorizes equivalent rate reductions to Medi-Cal managed care plans. Physicians statewide have been receiving notices from Medi-Cal HMOs instructing them to accept a 5 percent reduction in their contracted rates or be dropped from the plans.

Citing the extreme hardship to patients and adverse affects on the health-delivery system, CMA’s Executive Committee has authorized the filing of a lawsuit to stop the cuts, which are to take effect on January 1. The lawsuit will charge that the reduced rates fail to meet federal standards requiring that provider payments be sufficient to assure patients equal access to medical care. A number of patient, consumer, and provider groups will join CMA as plaintiffs in this suit.

CMA officials have sharply criticized the Medi-Cal cuts, saying the cuts would hurt patients and cost the state more than it saves. Medi-Cal patients are primarily children, the poor, the elderly, and the disabled. Patients unable to find care will be forced into emergency rooms, where the cost of care—and the eventual cost to taxpayers—is multiplied three or four times.

The 5 percent cut means that an internist or family physician would receive less than $23 for a typical office visit. Before the cuts, California ranked 42nd out of 50 states in its reimbursement to physicians.

In a CMA survey last year, 75 percent of physicians said further cuts to Medi-Cal would limit the number of Medi-Cal patients they are able to see; 68 percent said they would stop seeing new Medi-Cal patients; and 40 percent said they would cease participating in the program altogether.

Though the court case is likely to not be resolved for months, CMA will seek a court order delaying all Medi-Cal cuts until the case is concluded.

In the meantime, physicians who contract with Medi-Cal managed care plans will need to decide whether they want to remain with the plans. One option is to attempt to negotiate a contract amendment to ensure that reduced rates apply only if they are actually implemented. Sample language could read:

I only agree to these reductions to the extent they are implemented by the Department of Health Services and/or otherwise not enjoined by a court of law.

Physicians who believe their termination would impose hardships for Medi-Cal beneficiaries in their area may wish to contact the plan’s provider relations or contracting department in an effort to obtain higher reimbursement rates.

Physicians who decide to terminate their Medi-Cal managed care contracts are urged to review CMA ON-CALL document #1055, “Contract Termination by Physicians and Continuity of Care Provisions,” which contains information on a physician’s rights and obligations when terminating a contract. ON-CALL documents are available free to members at CMA’s members-only website. Nonmembers can purchase ON-CALL documents for $2 per page from CMA’s online bookstore.

Physicians can help CMA’s legal efforts to stop the Medi-Cal cuts by signing declarations that will be submitted to the court demonstrating the negative impacts the Medi-Cal fee cuts will have on the state’s health care system. Physicians who are interested in signing such declarations should contact Heather Campbell at 916/551-2564 or hcampbell@cmanet.org.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.