Medical Coalition Sues State Over Cuts in Medi-Cal Reimbursements

A coalition of medical groups has filed a lawsuit in federal court to reverse a legislatively approved cut in the rates that Medi-Cal pays doctors.

The groups say the 5% rate cut approved in this year’s budget to save California $115 million violates the federal Social Security Act. That law, according to the California Medical Assn. and other plaintiffs, requires that Medi-Cal pay rates that will attract enough doctors to serve the program’s patients.

Medi-Cal, the nation’s largest Medicaid program with 6.5 million beneficiaries, reimburses health-care providers who treat the poor and uninsured.

According to the lawsuit, which was filed in U.S. District Court in Sacramento, the rate reduction is making it impossible for many doctors to treat Medi-Cal patients. Courts in the past have been sympathetic to that argument. Health-care advocates filed a similar lawsuit in 1987 after similar cuts in reimbursement rates. In that case, rates were ultimately restored.

“The state is greatly injuring the most vulnerable Californians,” said Jack Lewin, chief executive of the association, which represents 34,000 doctors. He and others said it was already costing many doctors to treat Medi-Cal patients, some of whom must travel miles just to find an office that will accept them.

After the cut takes effect in January, internists and family physicians will receive about $23 from Medi-Cal for a typical office visit.

The lawsuit says the number of primary-care physicians who agree to treat Medi-Cal patients is one-third lower per capita than for the general public. For specialists, it is 50% lower; for surgeons, it is two-thirds lower. But the California Medical Assn. was unable to provide figures for how much more of a decline -- if any -- will occur in access to care once the rate reduction takes effect.

State officials defended the cut.

“In good times the Davis administration increased provider rates,” said Hilary McLean, spokeswoman for Gov. Gray Davis. “The very harsh reality is in the last few years California has been buffeted by sharp declines in revenue. We had to make a lot of tough decisions in order to eliminate the budget shortfall.”

According to the California Department of Health Services, the defendant in the lawsuit, the reimbursement cut exempted certain types of facilities to lessen the impact on Medi-Cal patients. The rates will not be cut for nursing homes, clinics and some hospital services.

The health-care groups call the cut shortsighted because every dollar the state spends on Medi-Cal is matched by the federal government.

The state, they say, will lose more than $115 million in federal money as a result.

The provider rate cut was put in the budget to help the state close a $38-billion budget gap. Davis initially had proposed a 15% cut, but legislative leaders scaled it back in the final budget deal.