Medi-Cal Cuts Proposed Budget Would Cut Medi-Cal Reimbursement by 10% As reported by the CMA 1/16/04

The new administration on Friday, Jan. 9, 2004 released its proposed 2004-2005 budget which includes a 10 percent cut to Medi-Cal provider rates and caps enrollment for Healthy Families and other health and welfare programs. Californians United for Quality Health the CMA-led coalition of physicians, patients, and consumer and health care advocates continues to work hard to make the administration understand that the proposed cuts will actually end up costing the state more than they save. Not only will the state forfeit hundreds of millions in federal matching dollars, but the cuts will also drive up costs in overwrought emergency rooms. The 10 percent in Medi-Cal cuts mimics those proposed by Governor Gray Davis last year. Gov. Davis' cuts were reduced by the legislature to 5 percent and would have gone into effect on January 1, had CMA not sought and won an injunction in federal court. In granting the preliminary injunction, U.S. District Judge David Levy said that the state of California failed to consider how the cuts would affect access to care for the more than 6 million poor, disabled, elderly and children whose health care is provided by Medi-Cal.

10 Percent Cut to Provider Reimbursements: While the 10 percent cut to physician rates would save the state $443 million, it would also result in a loss of $485 million in federal matching dollars. For every Medi-Cal dollar cut from the General Fund, California loses more than one federal matching dollar. The governor's budget also assumes savings from the 5 percent cut to provider reimbursements that was passed and signed in the '03 -'04 budget, despite the preliminary injunction granted last month in federal court. The state has filed for reconsideration of the case, which effectively delays their decision to appeal until March. If the state appeals the case, the injunction of the 5 percent cut remains in place. An appeal could take at least a year to be determined. If the state and governor cut reimbursements by another 10 percent, CMA and its co-plaintiffs and other supporters will file for another injunction on the 10 percent cut. Needless to say these cuts aren't likely to take place anytime soon, if at all.

We will keep you advised on the progress of the CMA, and alert you to further developments as they arise.