California Gets Green Light on Medicaid Cuts

October 31, 2011

Medicaid providers in California are likely to see their payments reduced after federal officials okayed cuts in reimbursements paid to doctors and clinics.

Officials with the Department of Healthcare Services pursued the action as a way to control costs in Medi-Cal, the state's Medicaid program.

For several years the California legislature has grappled with budget shortfalls, exacerbated by growth in Medi-Cal enrollment and increasing costs for health care.

The payment reductions, which could be as large as 10 percent, are projected to save the state $623 million.

A reduction in payments to hospitals and those treating children was initially requested, but withdrawn when federal officials raised concerns over continued access to care.

Officials with the Centers for Medicare and Medicaid Services said they would monitor the impact of the cuts to ensure that Medi-Cal enrollees still have access to care.

A number of nursing homes sued the state over an earlier round of payments cuts. Arguments in that suit were heard last month by the U.S. Supreme Court.

Other states, either requesting or considering payment cuts, will undoubtedly be encouraged by the CMS action.

The payment cuts were not the only changes requested. California also sought increases in co-payments and limits on doctor visits. CMS has yet to issue a ruling on those issues.