Medi-Cal Cut Threatens Poor, Disabled

Times Staff Writers

For 10 years, Wendy Botwin has struggled to overcome brain damage, balance problems and other disabilities suffered in an automobile accident.

Finding doctors willing to provide the specialized care she needs has been just as difficult.

More often than she can count, she has been rebuffed. And her experience is far from unusual. She is on Medi-Cal, the state and federal program for poor and disabled people, and studies show that many physicians consider its rates too paltry to accept.


“It’s extremely stressful and frustrating to deal with the whole bureaucratic system and keep getting turned down all the time,” said Botwin, 36, of Oakland.

The challenge for patients like her is about to become greater because a 5% cut in Medi-Cal payments took effect Sunday. Nearly 3.3 million patients treated by physicians, dentists and home health agencies on a fee-for-service basis could be affected.

Payment for a routine doctor’s visit has dropped from $24 to $22.80, less than half the amount a physician can receive from private insurers.

The temporary reduction will expire at the end of the year unless it’s extended by the state Legislature. Hospitals, nursing homes, hospice services, pharmacies and labs are not affected. Nor are managed-care plans that serve roughly half the state’s estimated 6.7 million Medi-Cal recipients.

Nonetheless, medical groups and advocates for the poor fear that the state cut will fracture an already brittle Medi-Cal system and reduce access to healthcare for some of California’s most vulnerable patients.

They warn that doctors -- particularly specialists -- may reject new Medi-Cal patients or drop out of the program entirely.


“There is no question that further reducing already low rates will reduce access,” said Linda Rosenstock, dean of UCLA’s School of Public Health. “It’s not a question of doctors getting out of Medi-Cal; it’s a question of how many.”

Botwin, who is disabled and can’t work, dreads the prospect of seeing her carefully crafted network of healthcare unravel.

“I feel like only rich people are able to get the medical care they need, which is really wrong,” Botwin said. “Those of us who need access the most ... have the least access.”

The state’s move comes just as legislation to reduce federal spending on Medicaid -- the U.S. government’s name for programs such as Medi-Cal -- awaits final action in the House of Representatives. The bill would allow states to require patient premiums or co-payments, perhaps further reducing access to care.

Moreover, the state action comes after years of political and court battles over proposed reductions and restrictions in the Medi-Cal program, which, after K-12 education, receives the most state funds. Last year, Gov. Arnold Schwarzenegger sparked intense opposition when he proposed moving half a million elderly, blind and disabled Medi-Cal patients into managed-care plans. That move was put on hold.

The Medi-Cal program has had only one sizable increase in payments to healthcare providers since 1985.


State officials say the reduction is needed to help control Medi-Cal’s soaring cost, which is growing by $1 billion a year.

“We don’t like the rate reduction at all,” said Stan Rosenstein, deputy director for medical services at the state Department of Health Services. “We think providers should get compensated. It’s not a desirable change.”

He said the Schwarzenegger administration is talking to provider groups about alternative ways to contain costs. But cutting provider payments is “better than reducing benefits” or cutting patients’ eligibility for Medi-Cal, he said.

California has been comparatively generous with Medi-Cal patients, Rosenstein said. In the last 20 years, the state has chosen to use its resources to expand eligibility and services rather than significantly boost provider payments, he said.

“Every state believes we’ve got to do something to contain Medicaid costs,” he said.

The reduction is expected to save $65 million out of the nearly $13 billion the state is spending this fiscal year on Medi-Cal. The total budget for the Medi-Cal program is $34.5 billion, most from the federal government.

The California Medical Assn., the professional organization that represents doctors, is seeking legislation to overturn the cut and providing physicians with a list of media talking points.


Among them: Acutely ill patients will seek far more costly treatment in emergency rooms if they cannot find a doctor who accepts Medi-Cal. And California’s reimbursement rates for Medi-Cal services are among the lowest in the nation.

Some doctors say any cutback will force them to reconsider their commitment to the program.

Dr. Stuart Finkelstein, an internist and addiction specialist who runs a clinic in Cerritos with his physician wife, said he is torn between a desire to do good by all patients, no matter what their insurance status, and the practical consideration of staying in business.

Finkelstein, who has practiced in the community for more than 25 years and has accepted Medi-Cal patients the entire time, said he would have to think hard before accepting new cases.

“On a financial basis, I don’t think it’s worth taking Medi-Cal patients,” he said. “If it were a major part of my practice, I wouldn’t be able to do it. But if you’ve had patients for a long period of time, you feel obligated.”

Dr. Thomas Horowitz, a Los Angeles family practice physician, said that as it stands, Medi-Cal doesn’t come close to covering his expenses.


“We can’t serve anyone if we don’t stay in business,” he said.

Many physicians don’t bother billing the state -- because they “often spend far more time fighting the system to get the medicines and tests they need” than they do with the patient, Horowitz said.

Virtually all the patients in the subdued Chinatown waiting room of Dr. George Ma are Medi-Cal recipients, many suffering from chronic illnesses.

But Ma, who immigrated to the United States from Shanghai more than 40 years ago with $100 and the clothes on his back, said he is committed to serving his mostly Asian and Latino clientele.

“It makes no business sense,” said Ma, an internist. “We’re doing it purely out of altruism.”

Sitting in an exam room with stacks of medical records, Ma said rising insurance and malpractice rates make it increasingly difficult to do business. He tries to cover his expenses through volume, seeing 30 to 40 patients a day.

But “if someone fractures their arm, I can’t find an orthopedics specialist who’ll take Medi-Cal, and it’s the same with neurosurgery,” he said. “I can’t find a psychiatrist, so I end up being the psychiatrist. It’s not my specialty, but what am I going to do?”


Physician groups and other advocates for Medi-Cal patients have been fighting attempts to cut the program for years. They have been largely successful in the courts -- but a recent decision by the U.S. 9th Circuit Court of Appeals opened the door to reductions proposed three years ago by then-Gov. Gray Davis.

A three-judge panel ruled last summer that neither recipients nor providers have the legal standing to challenge the state’s compliance with the federal Medicaid law. The appellate decision overturned a lower court order that had blocked the state from reducing payments.

Some providers are better able than others to compensate for any loss in funding. Nonprofit clinics, for instance, tend to rely on diverse sources, including foundation grants and private donations, which might be used to fill temporary gaps.

But many clinic leaders said they will feel the strain.

“We use the surplus from Medi-Cal work to subsidize services for the uninsured, so it has double-whammy impact,” said Jim Mangia, chief executive of St. John’s Well Child and Family Centers, whose agency operates six facilities in downtown and South-Central Los Angeles that serve more than 60,000 uninsured patients a year.

Roberto Juarez, administrator of Clinicas del Camino Real in Ventura, said the reduction in Medi-Cal reimbursements will mean the loss of about $500,000 a year.

“It’s a substantial amount,” he said. “It will be a major hit. Hopefully it will hit slowly so we can absorb it.”


Juarez said the clinic sees about 150,000 patients a year, 57% of whom are in the Medi-Cal fee-for-service program. As a condition for receiving federal grants, Juarez said the clinic must serve Medi-Cal patients “even if we don’t make money on them.”

Meanwhile, some foundations say they can’t be expected to fill in for the state government.

“It’s important to understand that it’s impossible and unrealistic to expect that healthcare foundations could make up the difference,” said Ruth Holton-Hodson, director of public policy for the California Wellness Foundation. The foundation currently provides 127 grants totaling $23 million to nonprofit hospitals and community clinics around the state.

Doctors and clinics aren’t the only ones facing tough choices. Home health agencies that serve medically fragile adults and children also are worried.

David Dial, president of Pro-Care Home Health Services in Sacramento, said he will begin phasing out services for Medi-Cal patients, who make up 96% of his patient load. Instead, he will focus on those getting Medicare, the federal program for the elderly and disabled, for which he was recently accredited.

Dial’s group, one of the largest in the state, provides in-home nursing care for patients needing chemotherapy, wound treatment, intravenous medications and other services.


He estimates that his agency alone, which provides 3,600 to 4,000 hours of nursing care each month, saves the state $15 million annually by keeping patients out of hospitals.

“They’ve been banking on people being squeezed and squeezed and that nothing will happen,” Dial said. “Well, they’re wrong. I can’t stand another 5% cut. Our costs go up every year.... Unfortunately, the state has taken advantage to the point where we’re losing money and we’re subsidizing the Medi-Cal program for them. As much as it’s going to break our hearts, as the Medi-Cal patients discharge out we’ll replace them with Medicare.”

Dial noted that many other home care agencies already have limited their Medi-Cal clientele. His phaseout will make it that much harder for new patients to obtain services.

“It’s the kids who won’t be able to easily find agencies for in-home care,” he said. “Working parents with no other alternatives will have to quit their jobs.”

Although many Medi-Cal patients haven’t yet heard of the reduction, others, such as Sharon Steele, 55, are nervous.

Steele, who has cancer and diabetes, sees several doctors at the City of Hope National Medical Center in Duarte. She said she trusts them and doesn’t want to lose them.


She has not talked with her doctors and has heard nothing to indicate her status will change.

“But the gravity of it frightens me. How do I receive care if I have to find another doctor and if I can’t afford to pay?

“I’m sure they’re giving me much more treatment than they’re getting paid for,” she said. “They’ve treated me well, but that’s not to say they will treat me for free.”



Budget cut hits Medi-Cal patients

About half of California’s Medi-Cal patients could be affected by a 5% reduction in payments to doctors who see them on a fee-for-service basis. A look at the issue:

Total patients by county

Los Angeles: 2,358,242

Orange: 363,944

Riverside: 285,623

San Bernardino: 377,828

San Diego: 343,747

Ventura: 103,277

Statewide: 6,540,481


Percent of patients in fee-for-service program

Los Angeles: 48.3%

Orange: 19.3%

Riverside: 47.4%

San Bernardino: 48.5%

San Diego: 50.5%

Ventura: 99.9%

Statewide: 50.2%

Note: Figures are as of April. Ventura County does not offer a managed-care program.


State spending on Medi-Cal

In billions, fiscal years

2000-01: $9.2

‘01-02: $9.8

‘02-03: $10.9

‘03-04: $9.9*

‘04-05: $11.7

‘05-06: $13.0

*A one-time increase in federal funding temporarily reduced the state’s cost.


Patients statewide

In millions, fiscal years

2000-01: 5.3

‘01-02: 5.9

‘02-03: 6.4

‘03-04: 6.6

‘04-05: 6.6

‘05-06: 6.7*

*Projection for 2005-06 fiscal year


Source: California Department of Health Services


Times staff writer Catherine Saillant contributed to this report.