California doctors fight back: Medicaid pay cut goes to court

The AMA supports the California Medical Assn.'s lawsuit challenging a Medi-Cal payment reduction that could hurt patients' ability to get care.

Posted Aug. 9, 2004.

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Should Medicaid patients have the same access to high-quality medical care as people with private insurance?

The answer, of course, is yes.

But the reality is that they often don't.

A major reason for that sad fact is that Medicaid in many states pays doctors so poorly, sometimes below their costs, that many physicians don't have the financial wherewithal to continue participating in the program.

Overall, Medicaid pays doctors less than 70% of the Medicare rate. But that figure, published in a June Health Affairs article, is an average. Some states pay only half or one-third Medicare's rate.

Many physicians have reached the end of their ropes. A notable example of their fighting back, with some success, is a lawsuit California doctors have filed against the state. The California Medical Assn. in 2003 won a preliminary injunction against a 5% Medicaid payment reduction that was to go into effect at the beginning of this year. The state has appealed the decision.

The AMA and the American Academy of Pediatrics have rightly supported the CMA in this fight. The two groups submitted a friend-of-the-court brief last month asking a U.S. appeals court to uphold the injunction.

The crux of their argument gets back to that notion of equal access to health care services for Medicaid patients. It is required by federal law. But California, as well as many other states, is breaking that law by failing to pay doctors adequate rates, the medical groups argue.

Nationwide, more than 51% of Medicaid recipients are children. But only 54.6% of private pediatricians providing primary care services accept all program participants who need care, according to a 2002 Pediatrics article. In California, where Medicaid pays doctors about half Medicare's rates, the figure is even worse -- just 33.1%

In many areas, Medicaid is breaking trust with those who rely on it. These patients have a hard time finding primary care physicians and often an even tougher time finding specialists who'll see them. Waits for appointments grow. Travel times to doctors' offices increase. Patients lose continuity of care.

Tragically, hardest hit are children with chronic conditions, such as asthma, attention-deficit/hyperactivity disorder or cerebral palsy, because they need more medical services and specialty care than other kids, the medical groups note in their brief.

Medicaid's payment and access problems didn't arise in a vacuum. States are hurting for money, thanks to the recession. When states run into financial trouble, they frequently use Medicaid cuts to shore up their budgets. Often, reducing physician payment is the most politically palatable option. But government leaders in these cases aren't taking into account the impact this strategy has on patients' ability to get care. Doctors, though, are painfully aware of the situation, and that's why they're taking action.

The California government argues, incredibly, that medical groups and patients have no legal standing to sue the state over the Medicaid payment cut.

The AMA and AAP make several sound legal points in their brief to the contrary. When push comes to shove, California and many other states have shown that they are not willing to comply with the equal access law. The medical groups note that the General Accounting Office has found that most states don't set goals for or even analyze the availability of primary care physicians in fee-for-service Medicaid.

If doctors and patients can't keep the states honest regarding Medicaid, who will? If they can't fight arbitrary cuts to physician payment, such as California's attempt, an already bad patient access situation is sure to grow worse.

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