Press Releases

SACRAMENTO—The Alliance for Patient Care, a broad coalition of health care groups, released the following statement in response to the historic cuts to health care services proposed in the budget this week.

"Slashing more than $2 billion in Medi-Cal funding severely threatens the health care provided to California’s low-income families by an already fragile health care system. If implemented, these cuts will erect more barriers for low-income Californians to access health services and will force tens of thousands into high-cost emergency rooms for care. The reductions would force doctors and other providers out of the Medi-Cal program, place increasing pressure on already financially strapped hospitals, and could force clinics to close their doors.

The budget proposal disproportionately impacts California’s most vulnerable patients – seniors, those in foster care, the poor, disabled, and chronically ill – who are least able to access health care. Additionally, important services such as home health care and dental and eye care would be cut. Reductions in these services, particularly for chronically ill patients, will force many of these patients into long-term facilities and hospitals, where the care is even more expensive.

Making matters worse, the budget uses accounting gimmicks to delay payments to health care providers by as much as a month. When the state delayed payments during last year’s budget standoff, some providers – particularly health clinics and home health care services – struggled to keep their doors open to all patients.

Cuts of this magnitude have not been proposed in recent memory.

These cuts may have been proposed to address a budget shortfall, but they will cost California dearly in the short and long run. Not only will the state lose valuable federal matching funds worth more than $1 billion every year under this proposal, but the costs of health care will rise for everyone as patients seek care in emergency rooms and other expensive forums.

We cannot afford to take such a giant step backwards in health care in this state."

The Alliance for Patient Care coalition is a group of health care providers and patient groups that advocates for greater access to care for California’s most vulnerable patients in the Medi-Cal and Healthy Families programs.

Quotes from representatives of various member groups of the coalition:

"It is inconsistent to talk about expanding health care coverage for low-income families at the same time we are cutting the budget of the state’s health care program for low-income families. Cutting the budget for Medi-Cal will only exacerbate the problems the Governor’s health reform plan was designed to solve. Fewer Medi-Cal dollars will mean less access to doctors for low-income families, more patients in emergency rooms, and higher health care costs for everyone."

- Richard Frankenstein, M.D., President of the California Medical Association

"The additive impact of these proposed cuts in health care on our most vulnerable low income frail elders will put their very lives at risk. Adult day health care and Alzheimer’s day care centers are small, important programs designed to keep people living in their communities. They rely almost 100% on Medi-Cal funding. A 10 percent cut in the rate, plus five weeks of no cash flow will shut down a significant number of these programs, some permanently. Without the support of day services, most displaced individuals will end up in a nursing home, costing the state four times as much. "

- Lydia Missaelides, Executive Director for the California Association for Adult Day Services

"The Governor’s budget proposals have severe consequences for our most vulnerable citizens. Delaying Medi-Cal payments supporting aged and disabled Californians in nursing homes by a month will create extreme hardships for thousands of Medi-Cal beneficiaries dependent on weekly payments for their care. The delay could also put struggling providers into bankruptcy, which would cause the dislocation of this frail population."

- Jack Christy, Director of Public Policy for Aging Services of California

"Cutting Medi-Cal reimbursement for dialysis patients would be counter-productive. Medi-Cal reimbursement rates are already so low they do not cover the cost of dialysis treatment. Further lowering these already inadequate rates could lead to access problems and higher rates of hospitalization for dialysis patients, thus increasing costs to a level which would more than offset the anticipated savings!"

- Cindy LaMunyon, President, California Dialysis Council

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SACRAMENTO – Health care providers facing 10% rate cuts and entire elimination of other health care services will testify today before the Senate Budget Committee that the proposed cuts will devastate access to care for patients.

"Fewer Medi-Cal dollars will mean less access to all providers for low-income families, more patients in emergency rooms, and higher health care costs for everyone," said Richard Frankenstein, M.D., president of the California Medical Association. "It makes no sense to leave federal dollars on the table when they could go to pay for health care for low-income Californians."

Those testifying are part of the Alliance for Patient Care, a broad coalition of health care providers and patient groups that advocates for greater access to care for California’s most vulnerable patients in the Medi-Cal and Healthy Families programs. More information is available at the APC website.

Further reductions in payments for services to Medi-Cal patients will cut into already low rates that don’t even cover the cost of care. Medi-Cal patients already have difficulty accessing providers because of low rates paid for those services. Under current Medi-Cal rates, a primary care office visit goes for about $20, for example, which doesn’t cover the costs of a physician’s overhead, time, or other expenses.

"At the current time in the state of California, obstetrical care hangs by a slender thread as providers barely recoup their costs in caring for Medi-Cal patients," said Dr. David Priver, a San Diego physician and fellow for the American College of Obstetricians and Gynechologists in California who will testify at the hearing. "A 10% reimbursement decrease will almost certainly result in providing care at a loss, something that cannot and will not be done. At this point, the thread will break and patients will no longer have access to prenatal care, a development which will lead to complications and, ultimately, much higher costs," he added.

The proposed cuts will decrease access for pregnant women on Medi-Cal because obstetricians facing cuts will be pushed to the financial breaking point and unable to take on new Medi-Cal patients.

"Lack of prenatal care will reverse years of work to get pregnant women into Medi-Cal during the first trimester of pregnancy," said Shannon Smith-Crowley, legislative advocate for the American College of Obstetricians and Gynecologists. "Lack of early prenatal care will mean three times more preterm births -- at great personal and financial cost. Preterm babies can have lifetime medical problems and cost the state $50,000 per birth. It will cost the state many times more to deal with the effects of the cuts than what they propose to save."

The proposed cuts, which slash $2 billion from the budget, disproportionately impact California’s most vulnerable patients – seniors, those in foster care, the poor, disabled, and chronically ill – who are least able to access health care. Additionally, important services such as home health care and dental and eye care would be cut. Reductions in these services, particularly for chronically ill patients, will force many of these patients into long-term facilities and hospitals, where the care is even more expensive.

Despite continual increases in health care costs, rates paid to providers have not kept pace with the costs of providing care. Cuts of this magnitude have not been proposed in recent memory.

Not only would the proposed cut create problems for Medi-Cal beneficiaries, it would also exacerbate the state’s deepening fiscal crisis. According to a 2004 report by Families USA, every dollar Medi-Cal spends generates $2.29 in business activity and related jobs for California. At this rate, the proposed $2 billion cut would trigger a $4.58-billion reduction in the overall state economy at a time when we can least afford it.

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The Alliance for Patient Care is a broad coalition of health care providers and patient groups that advocates for greater access to care for California’s most vulnerable patients in the Medi-Cal and Healthy Families programs.

Quotes from representatives of various member groups of the coalition:

"The Governor’s proposal literally puts the lives of our most fragile citizens at risk by forcing the closure of adult day health care facilities. The short term savings the Governor proposes are, in fact, more costly than the system in place today. Seniors ousted from adult day care will be forced into nursing homes at four times the cost, end up in emergency rooms, or a family member will have to quit their job to care for them. California’s budget crisis should not throw fragile elders and their families into crisis. And no matter how draconian this is on California families, it is hard to imagine a more devastating impact than the closure of centers caring for people with Alzheimer’s or other serious health problems. This brings shame to our state."

- Lydia Missaelides, Executive Director of the California Association of Adult Day Services

"Cutting Medi-Cal is bad health care policy and bad fiscal policy. Our health centers are already turning away thousands of patients each month because inadequate Medi-Cal reimbursement rates mean we can’t afford to staff clinics. Under the governor’s proposal, California will turn away millions of dollars in matching federal family planning funds. Everyone loses with these cuts."

- Kathy Kneer, President and CEO of Planned Parenthood Affiliates of California

"Increasing paperwork requirements for families on Medi-Cal and cutting funds for the front-line staff who serve them are examples of bureaucracy at its worst. These cuts will hit hard-working families hard, especially in my county where so many rely on Medi-Cal for preventive, acute and chronic health care needs. Our families and children deserve better."

- Elliott Robinson, Director of the Monterey County Department of Social & Employment Services.

"Our members are dedicated to providing care to those most in need, but the Governor’s budget virtually eliminates access to vision care for poor adults, leaving them with no alternative but the emergency room. It’s penny-wise and pound foolish. It’s critical these benefits remain available to adults on Medi-Cal, especially those at risk for diabetes, glaucoma, hypertension, blindness, and cancer, because through eye exams these diseases can be diagnosed and treated. Lives are literally saved."

- Dr. Robert Theaker, O.D., President of the California Optometric Association

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Senate and Assembly Budget Committees To Discuss Proposed Cuts To Health Services This Afternoon

Contact: Ned Wigglesworth, Alliance for Patient Care, 916-551-2873

SACRAMENTO -- The Alliance for Patient Care, a coalition representing more than 90 health care providers and patient groups, released today the following Top-10 list to demonstrate how proposed budget cuts to health care services will hurt California’s fiscal health.

Senate and Assembly Committees are scheduled to meet today to discuss cuts for the current fiscal year, including a proposed 10% cut to Medi-Cal and Healthy Families budgets for the remainder of the fiscal year. These cuts would drain $100 million from Medi-Cal, the state’s program to provide health care services to the poor, elderly, disabled, those in foster care, and others.

Because Medi-Cal rate changes take three months to implement, no savings would be achieved until June 2008. These "mid-year" cuts would also take three months to reverse, meaning any cuts made for FY 2007-8 would necessarily extend into FY 2008-9.

Alliance for Patient Care coalition members are available for media comment on the impact of these cuts on clinics, hospitals, physicians, nurses, home care services, seniors, children, underserved communities, chronic care, and more.

For a list of members, please visit the APC website.

Top 10 Fiscal Reasons Not to Cut Medi-Cal Funding

The Governor’s budget proposal includes taking more than $2 billion out of the already underfunded Medi-Cal program. Specifically, the budget proposes slashing funding for the Medi-Cal program by about $100 million ($48 million in state funds) in 2007-08 and $2.2 billion ($1.1 billion in state funds) in 2008-09. The proposed reductions include a $67 million ($33 million state funds) reduction in payment for Medi-Cal services in the current fiscal year and a $1.2 billion ($600 million in state funds) reduction in 2008-09. The budget also proposes savings by cutting certain optional benefits in Medi-Cal. While the impact of the proposed $2 billion Medi-Cal budget reductions on targeted providers is clear, there is also some collateral fiscal damage that might not be so clear.

1) Giving Up Federal Funding. California will lose a dollar of federal matching funds for every general fund dollar "saved" by the proposed Medi-Cal cuts – over $1.2 billion in federal funds will be forfeited. Some Medi-Cal services garner even more federal money. For each dollar the state spends on family planning services, California receives $9 federal match.

2) Creating Cost Shifts to Other Programs and Services. Reducing the level of support available from community based caregivers for the elderly, disabled and other vulnerable populations will force additional people into higher cost settings and result in higher costs in other state funded programs.

As an example, if rates are slashed, home health agencies may be forced to close their doors, forcing people into higher cost acute care facilities. A Medi-Cal beneficiary, who receives a home health visit every day costs about $2,300 a month. In an acute care setting a single day of service would cost more than an entire month in a home health environment. Similarly, nursing home care costs four times as much as the community alternative of adult day health care.

3) Worsening the "Hidden Tax" on Employers and Others. To the extent that costs formerly covered by Medi-Cal must be absorbed by other payers, those costs will be passed on to consumers and exacerbate the much discussed "hidden tax" for healthcare. According to the Governor’s estimates, every privately insured Californian pays a "hidden tax" of $455 per individuals and $1,186 per family every year to offset the uninsured and the effects of Medi-Cal under-funding.

4) Decreasing Use of Preventive Services. Instead of encouraging the use of lower cost preventive services, the proposed cuts will create barriers to these cost-effective services. For example, women who do not receive adequate prenatal care are three times more likely to have a pre-term birth, each pre-term birth costs the state $50,000 on average in medical and social services costs. Two-thirds of these costs occur in the same fiscal year as the birth. There are about 238,000 births to mothers enrolled in Medi-Cal every year. If pre-term births were to increase by just 1% as the result of women not being able to get prenatal care, the additional state costs would be almost $80 million in the year that rates were cut.

5) Increasing Use of Emergency Care. Decreasing provider rates will put pressure on California’s overburdened emergency system as Medi-Cal beneficiaries who can’t get access to primary and preventative care seek these services in the Emergency Department. Medi-Cal enrollees are already over represented in Emergency Rooms (ER) because they can’t find a doctor. Medi-Cal enrollees are about 15% of California’s population, but about 27% of ER patients. A recently released study in the journal Health Affairs showed that wait times in emergency rooms increased by 36% in just 7 years. The study suggests that this is due largely to compromised access to primary care services and suggests that access to these services needs to be expanded to reverse the longer wait time trend.

Further, a recent study found that patients who waited in the ER for more than six hours before being admitted to a hospital had longer hospital stays. The increased costs associated with longer wait times in the emergency department will offset any perceived cost savings from the 10% cut.

6) Undermining County Services. The loss of revenue for county operated clinics, programs and other services will have a significant impact on the overall financial health of some counties at a time when they are also struggling to cope with smaller budgets.

The budget has assumed for several years that fully funding Medi-Cal eligibility operations, coupled with statutory performance standards, results in savings due to timely redeterminations. The projected level of savings currently stands at about $450 million annually ($250 million General Fund). The proposed cuts – not just eliminating the annual cost of doing business increase, but also eliminating funding for caseload growth and cutting the base – are so deep that counties will no longer be able to meet these performance standards. As a result, annual redeterminations will be delayed and ineligible individuals will remain on the rolls, increasing benefits costs and resulting in the elimination of these assumed savings. In addition, Medi-Cal enrollees who cannot access care will seek services are likely to seek services in county funded facilities, which generally do not receive federal matching funds.

7) Hurting State and Local Economies. In areas where a hospital, clinic or health plan is a major part of the local economy, resulting reductions in staffing, wages, vendor contracts, etc. will be felt by the entire community. In rural areas especially hospitals, clinics and other providers are often major employers in a community. Reductions in services or closure of a facility will be deeply felt in these areas.

According to a 2004 report by Families USA, every dollar Medi-Cal spends generates $2.29 in business activity and related jobs for California. At this rate, the proposed $2 billion cut would trigger a $4.58 billion reduction in the overall state economy.

8) Increasing Administrative Costs. The requirements for federal approval, provider notification, and payment system changes will result in substantial implementation costs for the Administration.

9) Creating Huge Financing Costs. Exorbitant short term interest rates paid by providers forced to borrow money for payroll and other operational costs due to a Medi-Cal rate cut or payment delay will increase the base for some future provider rate setting. For others, these interest costs cannot be recouped and scarce public dollars will be used for interest payments instead of care.

10) Creating a Combined Impact. The same people affected by the Medi-Cal cut are also targeted for reductions in other budget areas such as foster care, mental health and other social services – the combined impact of multiple cuts may well undermine their very survival.

It just doesn’t add up. The Medi-Cal proposal to lower rates and restrict services will ripple out to patients, providers, local government, the state economy and individual taxpayers. Ultimately, this proposal generates no savings at all, puts lives of our most vulnerable populations at risk, and will cost California taxpayers far more than the projected savings.

The Alliance for Patient Care is a coalition of patient and provider organizations dedicated to protecting and improving access to health care for seniors, children, people with disabilities and families in the Medi-Cal program.

www.allianceforpatientcare.org 1201 J Street, Suite 200 Sacramento, CA 95814 info@allianceforpatientcare.org 916-551-2870

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Alliance for Patient Care Strongly Opposes Legislature’s Budget Cuts

Contact: Ned Wigglesworth, Alliance for Patient Care, 916-551-2873

SACRAMENTO – Responding to today’s votes by the state legislature to cut health care funding by more than $1 billion, the Alliance for Patient Care coalition (APC) today reaffirmed its strong opposition to the cuts to Medi-Cal, the state’s program for providing health services to low-income families. The Alliance, consisting of more than 100 provider and patient organizations, pointed to the increased barriers to health care for low-income Californians, the negative consequences on the state’s fiscal health, and the potentially devastating effects on the state’s health care system that will result from the cuts.

"These cuts will not only leave millions of Californians stranded with reduced or no access to their critical health care needs, but could break the back of a health care system that is already under serious strain," said Richard Frankenstein, M.D., President of the California Medical Association. "Medi-Cal patients will be forced into Emergency Rooms for their primary care, driving up costs and compromising access to emergency services for all Californians. These cuts aren’t fair or humane, and don’t even make economic sense. Legislators need to give more consideration than a hearing or two to the impact these cuts will have on all Californians."

The likely effects of these proposed cuts were highlighted this week around the state. In Los Angeles County, health officials there announced the proposed closure of all but one of the county’s dozen clinics. The county also plans to reduce services at six outpatient health centers. Patients have few options, particularly since Los Angeles County has lost nine hospital emergency departments since 2000.

In Sonoma County, the county’s only inpatient psychiatric care unit at Santa Rosa Memorial Hospital announced Wednesday it will close, partly because of financial difficulties incurred after a county mental health facility closed last year. The hospital is also closing two other facilities – one for acute care and another that offers skilled nursing.

These closures epitomize the effect the cuts will have statewide, with more closures of clinics, adult day health care, and other facilities dependent on Medi-Cal dollars. The package of proposed state cuts would drain more than $1 billion from Medi-Cal, the state’s program to provide health care services to the poor, elderly, disabled, pregnant women, those in foster care, and others.

Slashing payments for health care in California also means matching federal dollars get left on the table. California receives a dollar in federal matching funds for every Medi-Cal dollar spent. Current Medi-Cal rates are some of the lowest in the nation, and are, on average, 60% of Medicare and less than 50% of commercial rates.

In a news release today, Senator Sam Aanestad (R-Grass Valley), also expressed dissatisfaction with the cuts: "The health portion of this package that passed off the Senate floor today unfairly targets Medi-Cal provider rates."

"I find it incomprehensible that the majority party would offer up a flawed and costly health care reform plan in January that would have cost taxpayers $14 billion, then offer up a 10% cut in provider rates two weeks later," he continued. "Where are our priorities?"

Aanestad said he believes health care services are shouldering an unfair burden of the emergency spending reduction package that passed off the Senate Floor today. Medi-Cal physicians already receive less than thirty cents on the dollar for the services they provide, and today's action means even those paltry reimbursements will be reduced.

"California already ranks dead last among all states in Medi-Cal provider rates," said Senator Aanestad. "Today's action means doctors will simply stop seeing those patients. I predict this will lead to the demise of the Medi-Cal program."

"We don't have enough Medi-Cal providers in the rural areas that I represent in Northern California as it is," concluded Senator Aanestad. "Today's action will only make that problem worse."

The Alliance for Patient Care is a coalition of patient and provider organizations dedicated to protecting and improving access to health care for seniors, children, people with disabilities and families in the Medi-Cal program

www.allianceforpatientcare.org 1201 J Street, Suite 200 Sacramento, CA 95814 info@allianceforpatientcare.org 916-551-2870

Below are quotes from members of the Alliance for Patient Care.

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"Thousands of Californians with HIV/AIDS receive their care and treatment from Medi-Cal providers who are barely making ends meet today. The cuts today come on the backs of agencies like ours that serve indigent patients with serious, often life-threatening conditions. We cannot turn them away; but at the same time, our capacity to provide them with adequate healthcare is gravely compromised if the state shrinks the already meager payment we’re getting now."
-Michael Weinstein, President of AIDS Healthcare Foundation, the nation’s largest HIV/AIDS nonprofit care provider.

"By itself, a 10% cut for adult day health centers does significant damage to California's most vulnerable seniors. That is bad enough, but the greater travesty is that the 10% cut costs CA more money as a matter of absolute fact. Four weeks after the cuts take effect nearly 400 people will move from adult day health centers to nursing facilities. This will cost the state $15. 7 million more than it was spending on day center care. This "cut" costs the state more and is cruel."
-Lydia Missaelides, Executive Director, California Association for Adult Day Services

"When local psychiatric facilities lose beds or close altogether, as is inevitable with these draconian cuts, the predictable result will be more homeless mentally ill and more arrests and incarceration because of untreated mental illness. These results are preventable but not with $ 1 billion cuts to health care."
-Randall Hagar, California Psychiatric Association

"Our practice is Fruitvale Optometry in Oakland, California. Our single-doctor practice has been open for 3 1/2 years, and we currently serve approximately 2,000 Medi-Cal patients. The vast majority of these patients come to see us for routine eye exams because they want to receive new glasses. The doctor has discovered several systemic diseases during these routine eye exams, including diabetes, leukemia, strokes, multiple sclerosis, brain tumors, and AIDS. The 10% cuts will further damage our ability to help these patients who are most in need."
-Genesta Zarehbin, practice manager

"Cutting Medi-Cal rates is detrimental to people with end-stage renal disease and dialysis providers. With one in 9 American adults having chronic kidney disease, the California dialysis population is growing faster than our dialysis facilities. A Medi-Cal rate cut will result in fewer facilities, reduced access, greater hospitalization and increased costs to the state."
-Rick Duckworth, West Business Unit President, Fresenius Medical Care North America

"These deep cuts in Medi-Cal will drive health care costs even higher for everyone else because other Californians will have to pick up the tab for the severe under-payment for Medi-Cal. One can only imagine how much more all the rest of us will be forced to pay for our health care if significant Medi-Cal cuts are approved."
-Christopher Ohman, President & CEO, California Association of Health Plans

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Numbers no longer work, program could "fall off the edge;" Cuts will shift costs to taxpayers

Contact: Ned Wigglesworth, Alliance for Patient Care, 916-551-2873

SACRAMENTO – Monday’s Los Angeles Times reports that Medi-Cal provider rates are forcing doctors out of the state’s critical safety net program, making it harder for low-income Californians to find health care.

Already, California spends less per Medi-Cal enrollee than any other state in the nation. As the costs of providing health care have spiraled upwards, Medi-Cal rates have remained stagnant – the Legislature has provided only one across-the board increase in the last 20 years. The result, according to the Times: "Thousands of patients guaranteed health care under state law can’t get into a doctor’s office, so they don’t go or they sit for hours in an emergency room."

The 10% cuts to provider rates recently approved by the Governor and state legislature will only exacerbate the problem. An analyst for the California Healthcare Foundation warned that Medi-Cal risks are becoming so unattractive to doctors that the program could "fall off the edge." Throughout California, many Medi-Cal doctors who do take Medi-Cal already are finding it nearly impossible to find specialists for their patients.

The tragedy: the cuts won’t even save Californians money.

According to the Times, "Experts warn that costs to taxpayers could go up substantially more than will be saved through the budget cuts." With the 10% Medi-Cal cuts, California will lose more than $500 million in matching federal funds. What money the state saves will be passed on to local taxpayers and employers and individuals who do have or provide health insurance, the "hidden tax" effect Governor Schwarzenegger has so accurately described.

With the 10% Medi-Cal cuts, the long-term outlook for health care for low-income Californians is even bleaker. Teaching hospitals will be forced to cut back on training programs for physicians who serve in low-income communities. The family medicine residency program at California Hospital in downtown Los Angeles, one such program, graduates enough doctors each year to take care of 10,000 patients. Due to the cuts, that program will lose hundreds of thousands of dollars.

The Los Angeles Times article can be viewed here.

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The Alliance for Patient Care is a coalition of patient and provider organizations dedicated to protecting and improving access to health care for seniors, children, people with disabilities and families in the Medi-Cal program

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6 million Medi-Cal patients face reduced access to medical care, local communities statewide face loss of funding

Contact: Ned Wigglesworth, Alliance for Patient Care, 916-551-2873

WHAT: 350+ physicians from throughout California will march on the Capitol to protest 10% cuts to state’s Medi-Cal program, which funds health care for California’s low-income patients. Physicians will be wearing white laboratory coats, carrying a banner and signs indicating the impact of the Medi-Cal cut on their communities. The march is being held as part of California Medical Association’s 34th Annual Legislative Leadership Conference.

WHEN: Tuesday, April 15, 2008. Physicians’ march begins at Convention Center at 1:10 p.m., will reach Capitol by 1:30 p.m. Insurance Commissioner Steve Poizner will deliver keynote address at Noon at Convention Center.

MARCH ROUTE:

• Physicians will march down 13th street from the Convention Center to L Street;
• turn left on L Street to 15th Street;
• turn right down 15th street to M Street/Capitol;
• turn right up the center drive of Capitol Park and down to the East steps of the Capitol;
• split in three streams to enter the East, North, and South entrances to the Capitol.

WHO: 350+ physicians and medical students from throughout the state, all wearing white laboratory coats. Other physicians participating in CMA’s Legislative Day activities include doctors from the American Academy of Pediatrics, California Academy of Eye Physicians and Surgeons, California Academy of Family Physicians, California Psychiatric Association and California Society of Plastic Surgeons.

About CMA’s Legislative Leadership Conference: CMA’s Legislative Leadership Conference is a daylong annual event bringing together hundreds of doctors and medical students from throughout California to learn more about state government and the importance of legislative advocacy.

While visiting Sacramento, doctors learn more about the state government process by attending hearings and visiting with legislators from their local areas. The doctors are then able to give the legislators a first-hand account of their own experiences in treating patients and in operating their medical practices. The physicians also attend education seminars, hear guest speakers, and are briefed on dozens of bills pending before the legislature that are important to health care.

The Alliance for Patient Care is a coalition of patient and provider organizations dedicated to protecting and improving access to health care for seniors, children, people with disabilities and families in the Medi-Cal program

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Class Action Lawsuit Aims at Preventing 10 Percent Cuts from Taking Effect July 1; Providers Say Cuts Will Reduce Timely Access to Care

Contact: Ned Wigglesworth, California Medical Association, 916-551-2873

Regina Collins, California Dental Association, 916-554-5317

Jan Emerson, California Hospital Association, 916- 552-7516

Lydia Missaelides, CA Association for Adult Day Services, 916-552-7400

To view an explanation of the lawsuit click here

To view the Medi-Cal Summary click here

To read the plaintiff quotes click here

For general information about the issue click here

SACRAMENTO – In an effort to ensure that all Californians have continued access to vital health care services, a coalition of health care providers today filed a lawsuit against the state of California to prevent a planned 10 percent cut in Medi-Cal and Denti-Cal payments from taking effect on July 1.

In February, the Legislature approved and the Governor signed into law a total of $1.3 billion in cuts to the Medi-Cal program in an effort to stem the state’s budget crisis. The cuts are scheduled to take effect July 1 unless the court intervenes. In addition, the June 19 and August Medi-Cal payments to hospitals, pharmacists and adult day health care providers are slated to be delayed. For some providers – such as rural hospitals and individual caregivers – the delay in Medi-Cal payments may result in employees not receiving their paychecks and food service, pharmaceutical and other vendors not being paid.

The class action lawsuit seeks an immediate injunction to block the reduction in Medi-Cal payments. The suit was filed jointly by the California Medical Association (CMA); the California Hospital Association (CHA); the California Dental Association (CDA); the California Association for Adult Day Services (CAADS); the American College of Emergency Physicians, State Chapter of California (Cal/ACEP); the California Pharmacists Association (CPhA); and the California Association of Public Hospitals and Health Systems (CAPH).

Cuts Will Reduce Access to Health Care Services

The lawsuit, filed in Los Angeles County Superior Court, contends that the planned payment cuts violate state and federal laws that require that Medicaid (Medi-Cal) payments "must be sufficient to enlist enough providers so that services under the (state’s Medicaid) plan are available to recipients at least to the extent that those services are available to the general public." 42 C.F.R. §447.204

"Medi-Cal already doesn’t cover the cost of providing care," said Richard Frankenstein, M.D., president of the California Medical Association (CMA). "This chronic underfunding is forcing many doctors to leave the Medi-Cal program, which in turn deprives these vulnerable patients access to primary and preventative medical care. If these cuts take effect, Medi-Cal patients will be forced to seek care in already overcrowded hospital emergency rooms, which undermines access to care for all Californians."

According to the complaint, the reimbursement cuts authorized in February were implemented "solely due to state budgetary woes, without regard to the impact on the availability of Medi-Cal services." Such cuts are illegal, according to the complaint, and are "being imposed on a system already in crisis, wherein inadequate payment levels have resulted in a scarcity of willing providers, creating serious access hurdles for Medi-Cal beneficiaries." If the cuts are allowed to take effect, the lawsuit continues, additional health care providers will withdraw from the Medi-Cal program, which in turn will lead "to additional crowding of hospital emergency departments."

"California’s emergency rooms are overburdened and chronically overcrowded," said Michael Salomon, M.D., president of the American College of Emergency Physicians, State Chapter of California (Cal/ACEP). "Ambulance diversions and patient wait times are on the rise – with many patients having to wait hours, or even days, for a hospital bed. Slashing Medi-Cal payments will make things even worse."

California already ranks dead last in the nation when it comes to funding health care for Medicaid patients. According to the Kaiser Family Foundation, California spends $2,701 per Medicaid beneficiary – the lowest rate in the nation. The national average is $4,662 per Medicaid beneficiary.

Patients in rural areas of California may be particularly affected by the planned Medi-Cal payment cuts, where there may be only one pharmacy and the local hospital also serves as a skilled nursing facility.

"It is almost impossible to grasp the real impact of these cuts on small rural health care providers," said Charles R. Guenther, CEO of Eastern Plumas Health Care District, which operates two small hospitals in Portola and Loyalton in Plumas County, located in northeastern California. "Our organization has already been through bankruptcy once – we can’t go through it again. We have no operating cash on hand and we owe $1.5 million in accounts payable. We are the only health care provider for about 1,500 square miles. We are having great difficulty in getting essential supplies and keeping qualified staff even at the current level of Medi-Cal reimbursement. If the state pulls the rug out from us by implementing these cuts, we will have no choice but to reduce services and close facilities."

Reductions Violate Medicaid Regulations

The lawsuit also contends that under federal Medicaid law, the Secretary of the U.S. Department of Health and Human Services (HHS) must approve the policies and methods used for setting payment rates and that such changes may not be implemented by the state prior to HHS’ approval. According to the complaint, California has yet to submit what is known as a State Plan Amendment (SPA) to the federal government, requesting approval of the reduced Medi-Cal rates.

Additionally, federal regulations require the state to establish Medicaid payment rates for hospitals and other institutional providers through a public process that includes publishing the proposed rates and the methodologies and justifications used to establish those rates. No such process took place before the 10 percent rate reduction was approved, according to the lawsuit. Rather, the rate reductions were based solely on an across-the-board slashing of the state’s budget.

When it comes to Medi-Cal payments to physicians and other individual health care providers, the lawsuit charges that "state law requires that Medi-Cal fee-for-service rates be adopted pursuant to the regulatory process and requires the Department (Department of Health Care Services) to annually review Medi-Cal rates for physician and dental services, taking into account Consumer Price Index cost increases, reimbursement levels under Medicare and other third-party payors, prevailing customary charges and other factors." As with the cuts imposed upon hospitals, the lawsuit points out that no such regulatory process occurred before the rate reductions for physicians and other providers were approved.

The Providers intend to seek an injunction to stop the cuts from going into affect before July 1. We anticipate a court hearing on the request for an injunction within the next thirty to forty-five days.

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