Medi-Cal cut starts next month, state says

SACRAMENTO -- A controversial cut to the California’s healthcare program for the poor will begin next month, according to a bulletin distributed by state officials.

Doctors and other healthcare providers who serve Medi-Cal patients will be reimbursed 10% less once the changes are fully phased in by next January.

The first people to feel the pain will be dentists and medical transporters on Sept. 5. Next come providers of medical equipment and supplies on Oct. 24. The last to be affected are physicians, pharmacists and nursing facilities on Jan. 9.

Some exceptions will be made. Nonprofits that provide extensive dental surgery to children and nursing facilities in rural areas will not be affected. The cut also won’t apply to expensive prescription drugs used to treat multiple sclerosis, hepatitis and some other serious ailments.

These exemptions are slated to cost the state’s general fund $72 million in the current fiscal year -- spending that wasn’t expected in the budget recently enacted by Gov. Jerry Brown and lawmakers. State officials are still counting on roughly $387 million in savings.

The 10% reduction was originally included in the 2011 budget to save money during the state’s financial crisis, but it was delayed by a lawsuit.

The U.S. 9th Circuit Court of Appeals issued a June decision allowing officials to move ahead with the cut, frustrating advocates who say it’s not necessary because the state budget is on firmer footing.

“We were crossing our fingers the state would see the error of their ways,” said Lisa Folberg, vice president of the California Medical Association.

Norman Williams, a spokesman for the state Department of Health Care Services, said the cut is an important way to maintain “fiscal discipline.”

“The decision to make these reductions was a difficult choice, but necessary to address the state’s budget issues,” he said.

Because the cut was supposed to take effect two years ago, it will now be retroactive, and many healthcare providers will be required to return money to the state. Even the providers who qualify for exemptions will need to make some repayments.

Advocates are worried the cuts will decrease the number of providers willing to participate in Medi-Cal, right as California plans to expand the program as part of President Obama’s healthcare overhaul.

“We need physicians to come into the program more than at any time before,” Folberg said.

Williams said the state will closely monitor whether the cut to Medi-Cal rates affects patients’ ability to receive healthcare.

“Should any issues arise, we will address them immediately,” he said.

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Twitter: @chrismegerian