Cuts to Medi-Cal Provider Payments Cause System Shake-Up

Cuts to Medi-Cal Provider Payments Cause System Shake-Up

State lawmakers are currently awaiting a decision by a federal appeals court which may have a drastic affect upon the Medi-Cal program in California. If the court rules in favor of the state’s proposed plan, provider reimbursement rates will be cut by 10 percent.

 The court case concerns a law passed June 1, 2011, which outlines Medi-Cal budget cuts. The spending reductions never officially took effect, as the law has been challenged in court since that time. However, if the state does win the appeal and the cuts are applied, the changes are likely to hit providers fairly hard. Not only will reimbursement rates be lowered by 10 percent, but the changes will be retroactive dating back to June 2011. This means Medi-Cal providers will be required to repay the overpayment in fees they’ve received for the past two years.

 However, rather than send providers a bill demanding an immediate refund of the overpaid fees, the state will bill providers by cutting fees an additional 5 percent until the overpayment is corrected. This means providers will essentially face a 15 percent fee reduction until their overpayment balances reach 0, and at that point will face only the 10 percent reduction as originally scheduled.

 If the state wins the appeal, the fee reductions will take place at an inopportune time for Medi-Cal patients and providers. Due to the implementation of the Affordable Care Act and the subsequent expansion of Medi-Cal, the program is already facing a strain as it grows quickly to cover many more patients. This impending fee reduction poses an additional challenge to the state medical insurance program, as many providers and hospitals state they may no longer accept Medi-Cal patients.

 Over the next few years, Medi-Cal patients may face doctor shortages, longer wait times, and difficulties finding hospitals which accept their insurance. Whether the program will make further changes to compensate for these problems remains to be seen. Those who rely upon Medi-Cal or anticipate needing the program in the future should watch carefully for more policy changes, as the system adjusts to the many problems it faces.



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