Medicaid Pay Cut in California Reflects National Trend

State Medicaid programs are dealing with the loss of federal stimulus funds in the current fiscal year with their favorite belt-tightening move: cutting rates for physicians, hospitals, and nursing homes, according to a new survey by the Kaiser Family Foundation (KFF).

Case in point: the Centers for Medicare and Medicaid Services (CMS) yesterday approved a 10% pay cut for physicians and other providers sought by California's Medicaid program, called Medi-Cal.

Medicaid, which provides health insurance coverage to some 60 million Americans, is funded jointly by the federal government and the states, with the federal share currently ranging from 50% to 74%.

The recent recession strained the ability of states to fund their share in 2 ways — putting more Americans on Medicaid rolls, and reducing state tax revenue.

Even with the federal bailout, some states decreased physician reimbursement rates — 8 in fiscal 2009, 20 in fiscal 2010, and 14 in fiscal 2011.

At the same time, the number of states giving Medicaid raises steadily declined. Other states simply froze their rates. For physicians, such trends only made a bad reimbursement situation even worse — Medicaid typically pays less than Medicare and private insurers anyway.

Federal law requires Medicaid programs to pay high enough rates to ensure an adequate supply of providers who are willing to care for beneficiaries. However, since the program's inception in 1965, there always has been the fear that subpar rates would cause providers to turn away Medicaid patients,

Not all cost-cutting tactics such as chopping provider rates, tightening eligibility standards, or taking away benefits, are actually decreasing costs.

This emphasis on quality shows up in the increasing reliance on managed care. In fiscal 2012, 24 states are expanding their Medicaid managed care programs, up from 17 in fiscal 2011, according to the KFF report.

Managed care that was supposed to serve as a vehicle for pay-for-performance, which requires physicians to report quality measures such as preventive-screening rates and health outcomes for specific patient populations, has failed to either improve the quality of care or access to appropriate level of health care.

Another managed care tool is the patient-centered medical home, designed to better coordinate the care of those with chronic illnesses. Unfortunately, this  tool became yet another tool to deny access to care and to save money for managed care companies.

Interestingly, the Sunbeam Medical Association, aka American Medical Association (AMA),  a "Johny-come-lately" to physician-provider partnership cause, is silent on the mater? Shame on them!

This, yet another, cut in Medi-Cal reimbursements will further deny the access to appropriate care by causing more physicians and facilities to opt out of Medi-Cal.

We report, you decide!