10 Percent Cut to Provider Reimbursements: While the 10 percent cut to physician rates would save the state $443 million, it would also result in a loss of $485 million in federal matching dollars. For every Medi-Cal dollar cut from the General Fund, California loses more than one federal matching dollar.

The governor’s budget also assumes savings from the 5 percent cut to provider reimbursements that was passed and signed in the ’03 -’04 budget, despite the preliminary injunction granted last month in federal court. The state has filed for reconsideration of the case, which effectively delays their decision to appeal until March.

If the state appeals the case, the injunction of the 5 percent cut remains in place. An appeal could take at least a year to be determined. If the state and governor cut reimbursements by another 10 percent, CMA and its co-plaintiffs and other supporters will file for another injunction on the 10 percent cut. Needless to say these cuts aren’t likely to take place anytime soon, if at all.

Enrollment Caps: The governor’s proposal would cap enrollment in Healthy Families—which supplies health coverage for children in low-income families—at the January 1, 2004 level of 732,300. While this would save $31.5 million, it would result in a loss of $54.8 million federal matching dollars.

The proposal also caps enrollment in other heath care programs—including the AIDS Drug Assistance Program (ADAP), the Genetically Handicapped Persons Program (GHPP), and the California Childrens’ Services (CSS) program—saving another $2.6 million.

Two-Tiered Benefit Structure: The proposal creates a two-tiered benefit structure, which would require Healthy Family enrollees with family incomes between 201-250 percent of the federal poverty level to pay extra for vision and dental insurance.

Medi-Cal Fraud Savings: The budget proposal also assumes $143.5 million in savings from Medi-Cal fraud prevention strategies, including the use of forgery-proof prescription pads and increased efforts to investigate and prevent Medi-Cal fraud.

Federal Money: A Medi-Cal Managed Care quality assessment fee of 6 percent on health plans to generate a savings of about $75 million general fund. Plans would have to break off the Medi-Cal portion of their business into a separate entity in order to participate in compliance with federal requirements.

Decreased Prop. 99 Funding: The Governor’s proposed budget estimates a decline in Proposition 99 revenues based on a projected decrease in cigarette consumption. Due to this projected decline, the Governor has proposed the following cuts to program funding:

• $8 million from health education programs
• $7.4 million from UC research
• $6.1 million from Breast Cancer Early Detection Program
• $4.2 million from the California Healthcare for Indigents program
  

Other Cost Control Measures and Cuts: The governor’s budget also includes: a proposal to control county administrative costs by establishing productivity and performance standards and restricting county wage increases to specified cost-of-living adjustments; a 1-year moratorium on adult day health centers; and copayments for GHPP enrollees.