Uncompensated Loss of Federal Subsidy Imperils Patient Access to Medi-Cal

Friday, January 02, 2015

California added 2.2 million low- and no-income patients to Medi-Cal rolls this year, and then refused to compensate for losing a federal subsidy that paid primary care providers to see them. That is probably not a good thing for Medi-Cal patients, who already struggle to cope in the lowest level of state-subsidized health care available—California’s version of Medicaid.  

The Los Angeles Times said there are no state plans to replace the federal money that raised doctor reimbursement rates to something approximating Medicare during its authorized two years. An independent think thank, Urban Institute, estimated that California doctors would suffer a 58.8% fee reduction (pdf) because the state has one of the lowest Medicaid reimbursement rates in the country.

“Although payment is not the only factor in physician acceptance of Medicaid (Long 2013), research has demonstrated a correlation between lower payment rates and fewer physicians accepting new Medicaid patients (Decker 2012),” the report said.

“Cutting reimbursement rates will mean people will stop seeing Medi-Cal patients,” Carmela Castellano-Garcia, president and CEO of the California Primary Care Association, told California Healthline. “This is huge. We believe [the federal two-year bump] made a difference. We're going to see the impact, now that we're going to lose it.”

The federal government allocated around $5 billion for the “Medicaid bump” but the legislation expired on December 31.    

As the Urban Institute accurately noted in its report on the bump, “The Affordable Care Act (ACA) is designed to increase access to health insurance coverage in part through an expansion of eligibility for states’ Medicaid programs.” It is not necessarily designed to improve health outcomes for participating patients.

The study could not determine if the fee subsidy encouraged doctor acceptance of Medicaid patients. Many states were slow to implement the program after federal rulemaking delays, complicating the validity of survey data. “To date, it is unclear whether the increase in Medicaid primary care payment has had an effect on the number of physicians accepting Medicaid or the number of Medicaid patients that physicians are willing to see, and anecdotal evidence is mixed,” the report said.

Christopher Perrone, at the California HealthCare Foundation in Oakland, told the Los Angeles Times he and others thought the impact of the federal subsidy while it existed might be overestimated. California was slow to implement the program, doctors in managed care weren’t affected and subsidy payments were delayed. “People didn't see the increases until months and months after the fact,” Anthony Wright, executive director of the advocacy group Health Access California in Sacramento, told the newspaper. “And because people didn't see it, it had a limited effect in changing behavior.”

The Urban Institute said that as of October, 15 states had signaled their intent to use their own funds to continue the fee increase in 2015. Another 24 states said that they did not intend to continue the fee increase and the rest were undecided.

The end of the subsidy occurred on the same day a 10% cut in Medi-Cal payments to providers takes effect. The cut was originally passed (pdf) by the state Legislature during the budget crisis in 2011. It was tied up in court until June 2013 and has been phased in, with primary-care physicians this month being the last to get whacked.

–Ken Broder


To Learn More:

No Plans for California to Make Up for Expiring “Medicaid Fee Bump” (by Eryn Brown, Los Angeles Times)

Primary Care Medi-Cal Providers about to Be Hit by Double Rate-Cut Whammy (by David Gorn, California Healthline)

Looking Back at a Shift in the California Health-Care Marketplace (by Kathy Robertson, Sacramento Business Journal)

Loss of Temporary Medicaid Subsidies: Another Obamacare Blow to US Working Poor (by Thomas Gaist, World Socialist Web Site)

Reversing the Medicaid Fee Bump: How Much Could Medicaid Physician Fees for Primary Care Fall in 2015? (by Stephen Zuckerman, Laura Skopec and Kristen McCormack, Urban Institute)

30% of Doctors Will Refuse to Treat New Medicaid Patients (by Noel Brinkerhoff, AllGov)

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