State Plans Medi-Cal Rate Pinch

Gov. Arnold Schwarzenegger is planning to cut the rates the state pays doctors to treat the poor, a move medical groups warn would result in more Californians losing access to healthcare.

The administration announced in a bulletin mailed to Medi-Cal providers Monday that it planned to temporarily cut reimbursement rates by 5% through 2006. The news comes at a time when the rates already are so low that many doctors refuse to participate in the program.

“We are paying doctors at the lowest rate of any state,” said Dr. Jack Lewin, chief executive of the California Medical Assn. “Half the doctors in this state have dropped out of the program. The rest are staying involved almost as a goodwill service for their communities. This sends the message from the state that these patients are not that important.”

Under the current rate system, primary care doctors are paid $24 for an office visit by a Medi-Cal patient.

Administration officials say the cut merely reflects their effort to keep the state budget in balance.

“We recognize that this rate reduction is a hardship to healthcare providers,” said Ken August, a spokesman for the California Department of Health Services. “But California continues to face a deficit.”

The Medi-Cal cut was authorized by the Legislature under former Gov. Gray Davis but had been held up in court until this year. When it was approved, the state had a projected $38-billion budget shortfall.

Now California is in much better financial shape. Although the state technically continues to run a deficit -- it is on track to spend more money next year than it will bring in -- an unexpected surplus in receipts in recent months has left state coffers flush with enough cash to balance it out.

That leaves legislative Democrats questioning why Schwarzenegger is moving ahead with the reduction.

“We are in better financial condition now,” said Assembly Budget Committee Chairman John Laird (D-Santa Cruz). “We’ve already provided enough money in the budget to let the program continue uncut.... Provider rates are not adequate as they are. We should be looking at ways to increase them.”

Administration officials say the governor already has softened the blow to doctors by agreeing not to demand back payments from them for the years in which the cut was tied up in court. And they say they are willing to consider alternatives for saving the roughly $60 million the cut would generate for the state budget -- but nobody has stepped forward with any workable alternatives.

“The administration is open to considering all viable options,” August said.

California Medical Assn. officials intend to work with the administration in coming weeks on such options.

Lewin said the possibilities for saving money include rule changes that would reduce the number of tests that physicians could order for Medi-Cal patients and receive reimbursement.

“We’re hoping to work with the state to prevent a further exodus” of doctors from the program, he said.

The association has launched an aggressive lobbying effort to stop the rate reduction. A “special alert” e-mailed to its 35,000 members Monday urges them to “let lawmakers know that California physicians will not tolerate Medi-Cal payment cuts.”