California doctors, governor make deal to stop Medicaid cuts

Doctors also continue to plead their case in court against a reimbursement reduction.

By Mike Norbut — Posted Oct. 17, 2005

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California physicians are celebrating legislation passed last month that would keep the state's Medicaid reimbursement rates steady.

An agreement between the California Medical Assn. and Gov. Arnold Schwarzenegger gave rise to the measure, which would not cut rates even though a federal appellate court panel decision in August would have allowed the state to reduce reimbursement levels by 5%.

As of press time, the governor had not signed the bill, which was passed by both state houses. Officials from his office did not indicate what his intentions were, but medical association officials anticipated that he would sign the bill.

"We are extraordinarily pleased that Gov. Schwarzenegger has agreed to protect health care for the most vulnerable Californians," CMA President Michael Sexton, MD, said in a statement. "Medi-Cal rates are already low, and further cuts would have devastated this program, which provides care to the neediest."

In August, a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled that Medicaid beneficiaries and their physicians did not have the right as a group to enforce equal access standards under the federal Medicaid law as a way to stop the cuts. Attorneys representing the physicians and Medicaid recipients have filed requests to have the full panel of judges on the 9th Circuit review the panel's decision.

The appellate decision overturned a 2003 federal court ruling, which granted physicians an injunction blocking the 5% rate cut passed by the state as part of its budget that year. The decision forced the CMA to pursue a legislative strategy to protect rates while they continue to make their case in court.

The new bill will provide retroactive rate stability dating back to Jan. 1, 2004, when the cuts originally would have taken effect. It would ensure that rates remain stable through the end of this year. But CMA officials said they are working with the governor's office to find alternative ways to save the program money in the future without cutting reimbursement.

Physicians around the country who care for Medicaid patients have decried what they call extremely low reimbursement rates, and California ranks near the bottom of the list. The state's Medicaid program, known as Medi-Cal, pays physicians $22.80 for a standard office visit, according to the CMA.

If rates continue to decline, physicians say, many will be forced to stop accepting Medicaid patients, which could create an access-to-care crisis for some of the most vulnerable segments of the population.

California physicians said the bill, which would take effect upon being signed, would allow them at least to continue seeing Medicaid patients while they fight for a solution through the federal court system.

California is not the only state where physicians have challenged Medicaid reimbursement rates. Earlier this year, a federal judge found the Oklahoma Medicaid program in violation of federal law because reimbursement rates were not high enough to compel enough doctors to participate. And in 2002, an appellate court ruled that pediatricians and a Michigan children's welfare organization had standing to sue the state because children were not getting services that Medicaid mandates for those younger than 21.

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