No Medi-Cal Restoration In May Revise

Gov. Jerry Brown released this week his May revise for the California budget, and it is a decidedly mixed bag for healthcare.

Although the revise reduces overall spending on all programs by $1.3 billion, for a total of $96.4 billion for the fiscal year – the result of slower economic growth and the expiration of a federal payroll tax holiday – more money was earmarked for some healthcare programs. That included $1.2 billion to expand Medi-Cal coverage.

However, much of that money was earmarked to fortify the planned 2014 expansion of Medi-Cal enrollments under the Affordable Care Act. Under the revised budget, those who enroll in Medi-Cal next year as part of the program's expansion would be eligible for stays in rehabilitation hospitals and other long-term care programs – benefits that were not offered previously.

Funds to restore significant cuts to the Medi-Cal program that had been enacted in prior years were not provided.

“The governor did not propose any modification to previous budgets, which is one reason why we have a better budget this year,” Diana Dooley, secretary of California's Health and Human Services Agency, told members of the media during a Tuesday conference call.

Although Dooley acknowledged that a recent 10% cut to Medi-Cal provider rates and elimination of dental care for adults had been painful, her agency did not believe it created any problems with Medi-Cal enrollees accessing providers.

The providers themselves told a different story.

“The California Hospital Association is pleased to see that the administration supports the need for adequate rates to be paid for services provided to newly eligible Medi-Cal beneficiaries, but we believe adequate rates should be paid for all services provided to all Medi-Cal enrollees. California’s Medi-Cal rates are already the lowest in the nation,” said C. Duane Dauner, president of the California Hospital Association.

Of particular concern was a 2011 plan to cut Medi-Cal provider rates by 10% in many areas in an attempt to trim $600 million a year from the program. They included cuts to physicians and hospital-based skilled nursing facilities. Those cuts and others approved by lawmakers in 2011 are still being litigated in the federal court system and have yet to be fully enacted.

According to a study the CHA released earlier this month, the SNF cuts could lead to a loss of as many as 16,000 jobs statewide and result in economic losses totaling $2 billion.

“Expansion of (Medi-Cal) is a step in the right direction, and Gov. Brown’s dedication to that program on a statewide level is laudable,” said California Medical Association Medical President California Medical Association President Paul R. Phinney, M.D. “However, without restoring the proposed rate cut to the California system, ACA in California may be nothing more than an empty promise with an insurance card.”

Phinney also expressed disappointment that Brown's budget revisions did not include additional funds for the UC Riverside medical school, which is opening this summer.

CMA and the CHA have recently formed a coalition called We Care For California. Along with the two provider organizations, it includes health plans such as Anthem Blue Cross of California, Kaiser Permanente, hospital systems such as Dignity Health and the Service Employees International/United Healthcare Workers West labor union. 

The coalition will continue to press to restore the Medi-Cal cuts via public events, officials said.