CSAC Bulletin Article

Health and Human Services 10/28/2011

California Gets OK to Proceed with Medi-Cal Rate Cuts

California has received federal approval to enact up to $623 million in cuts to the state’s Medi-Cal program, including reductions to the rate the state pays to Medi-Cal providers.

The state Department of Health Care Services (DHCS) made the announcement yesterday that the Centers for Medicare and Medicaid Services (CMS) had approved three key elements of the state’s 2011-12 budget plan, including a 10 percent provider rate reduction for outpatient services. This rate reduction will affect the amount the state pays to physicians, clinics, optometrists, therapists, and laboratories, as well as for services like dental, durable medical equipment, and pharmacy. CMS also approved new 10 percent provider rate reductions for freestanding nursing and adult subacute care facilities as well as rate freezes for certain nursing homes. 

However, CMS has yet to rule on other components of the state’s 2011-12 budget, including adding co-pays for Medi-Cal recipients and limiting the number of times people can see a doctor each year. The state also withdrew a request to cut rates to hospitals and children’s medical providers earlier this year. 

The DHCS also announced yesterday a “groundbreaking” program to monitor the effects of the provider rate cuts on providers and access. The state took steps to develop ways to measure and monitor provider access in 23 ways. The monitoring measures assisted the state in deciding which rate cuts to withdraw from CMS.

The state’s Medi-Cal program serves more than 7.6 million enrollees, and California spends more than $14 billion on the program annually. However, even before the CMS ruling yesterday, the state already spent less per beneficiary than any other state.

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