Health care providers challenge cuts to Medi-Cal

By Judy Lin -

Published 12:00 am PDT Tuesday, May 6, 2008
Story appeared in MAIN NEWS section, Page A3

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Doctors, hospitals and other health care providers filed a class-action lawsuit Monday seeking to block the state from cutting payments to them for treating the poor.

The lawsuit challenges the single- biggest program reduction that elected officials have been willing to accept thus far as the state faces a deficit Gov. Arnold Schwarzenegger has said could be as high as $20 billion.

The suit contends that cutting Medi-Cal – the state-run health insurance program serving 6.5 million low-income residents – would making it harder to find caregivers willing to treat poor patients because payments are already so low.

The complaint, filed in Los Angeles County Superior Court, seeks an immediate injunction to prevent the cuts from taking effect July 1. A smaller group of health care providers succeeded in delaying a three-year, 5 percent rate cut during the 2003 budget crisis.

Schwarzenegger officials would not comment specifically on the suit, saying they had not had a chance to review the complaint.

But Norman Williams, spokesman for state Department of Health Care Services, said as difficult and painful it may be for doctors, dentists, pharmacists and hospitals to accept a 10 percent Medi-Cal reimbursement rate cut, the program "can't be exempt from the solution."

Gov. Arnold Schwarzenegger and lawmakers earlier this year approved more than $1 billion in Medi-Cal cuts to help stave off a cash-flow crisis. The state estimates it can save $558 million in the general fund by cutting reimbursement rates by 10 percent.

Health care advocates indicated early on they would resist the cuts and file suit.

According to the lawsuit, the state violated rules ensuring that the state's neediest have access to health care. The complaint said the cuts were implemented "solely due to state budgetary woes, without regard to the impact on the availability of Medi-Cal services."

Doctors warn that the 10 percent cut would create a ripple effect throughout the state's health care system. They say poor people will wind up in emergency rooms at a greater cost to taxpayers if they don't have access to basic and preventive care.

Dr. Dev GnanaDev, president-elect of the California Medical Association, said the average reimbursement rate for a doctor's office visit is $49.95, while a trip to the emergency room runs more than $400.

CMA was joined by the California Hospital Association, California Dental Association, California Association for Adult Day Services and California Pharmacists Association, among other health care providers.

Charles Guenther, CEO of Eastern Plumas Health Care District, which operates two small hospitals in northeastern California, said slashing Medi-Cal payments would force rural networks like his to shut down because they can't afford to do business when the state currently gives them just 7 percent of the cost of ambulance transport.

"It'd be interesting to see if the legislators can get a taxi ride on 7 cents on the dollar," Guenther said.

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