California Legislature Approves 10% Medi-Cal Rate Cut
[Posted 02/18/08]

Both houses of the California Legislature on Friday approved an emergency spending plan that will cut Medi-Cal provider rates by 10 percent, effective July 1, 2008. CMA believes that these cuts, rushed through the legislative process with little opportunity for public comment, are shortsighted and will have a devastating effect on California’s already fragile health care system.

“These cuts will not only leave millions of Californians stranded with reduced or no access to their critical health care needs, but could break the back of a health care system which is already under serious strain,” says CMA President Richard Frankenstein, M.D.   “Medi-Cal patients will be forced into Emergency Rooms for their primary care, driving up costs and compromising access to emergency services for all Californians.  These cuts aren’t fair or humane, and don’t even make economic sense.  Legislators need to give more consideration than a hearing or two to the impact these cuts will have on all Californians.”

The Medi-Cal program is seriously underfunded already, with only about half of physicians in the state taking Medi-Cal patients. Many cannot afford to take any new patients because reimbursements don’t cover the cost of care. Under current Medi-Cal rates, a primary care office visit goes for $20, for example, which doesn’t cover the cost of a physician’s time, overhead or other expenses. Currecc598nt Medi-Cal rates are some of the lowest in the nation, and are, on average, 60 percent of Medicare and less than 50 percent of commercial health plan rates.

Slashing payments for health care in California also leaves matching federal dollars on the table. California receives $1 in federal matching funds for every Medi-Cal dollar spent. The $544 million billion in state cuts would drain a total of $1.1 billion from Medi-Cal.

The likely effects of these proposed cuts was highlighted last week in Los Angeles, where county health officials announced the proposed closure of all but one of the county’s dozen clinics. The county also plans to reduce services at six outpatient health centers. Patients have few options, particularly since Los Angeles County has lost nine hospital emergency departments since 2000.

At Santa Rosa Memorial Hospital in Sonoma County, the county’s only inpatient psychiatric care unit announced Wednesday it will close, partly because of financial difficulties incurred after a county mental health facility closed last year. The hospital is also closing acute care and skilled-nursing facilities.

These closures epitomize the effect the cuts will have statewide, with more closures of clinics and other facilities dependent on Medi-Cal dollars. 

Contact: Lisa Folberg, 916/444-5689 or lfolberg@cmanet.org.