Health care providers: Medi-Cal cuts disastrous

A year ago, state leaders were pushing reforms to extend health coverage to all Californians.

Now, they are making budget cuts that could block access to health care for the poor and increase the population of the uninsured, health care advocates say.

Hospitals in Stanislaus County stand to lose almost $11 million from state Medi-Cal program cuts scheduled to take effect July 1, the California Hospital Association estimated.

But hospitals are not the only ones affected. Physicians and dentists, who already get slim reimbursements from Medi-Cal, the state's health care program for the poor, are facing a 10 percent reduction in payments. Pharmacists say the cuts will force them to sell medicine at a loss or stop filling prescriptions for Medi-Cal patients.

The Legislature approved the $1.3 billion in Medi-Cal cuts in February and Gov. Schwarzenegger signed them into law to help bridge a $17 billion state budget deficit. The state also plans to delay for a month the June 19 Medi-Cal payments to hospitals, pharmacists and adult day health care centers.

Up to $232 million in additional health care cuts were proposed in the governor's revised budget this month, including a reduction for hospitals that care for large numbers of uninsured.

In addition, more low-income residents could be without coverage because of proposed changes to Medi-Cal eligibility rules and benefits.

The cuts are expected to hit hard in the Northern San Joaquin Valley, home to more than 300,000 Medi-Cal recipients.

"These cuts may seriously start the meltdown of the health care system, especially for the small rural hospitals," said Jan Emerson, spokeswoman for the California Hospital Association. If "doctors drop out of the program because of these cuts," she said, "patients on Medi-Cal won't have a doctor and they are going to come to the hospital emergency rooms."

Trying to stop the cuts

A lawsuit by the hospital association, California Medical Association and trade groups representing dentists and pharmacists is seeking an injunction to block the cuts. On Wednesday, attorneys for the state were able to move the case to federal court in what the plaintiffs said was a delaying tactic.

The plaintiffs' attorneys are filing paperwork to return the class-action lawsuit to Los Angeles County Superior Court and schedule a hearing before July 1, said attorney Craig Cannizzo with the Hooper, Lundy & Bookman law firm's San Francisco office.

According to the lawsuit, the budget cuts are in violation of laws requiring the state to meet minimum standards so Medi-Cal patients have access to health care providers.

"They don't meet (the standards) now and the cuts will exacerbate the failure," Cannizzo said.

The governor's office maintains the cuts are necessary.

"As the state faces a $17 billion budget hole, we can only spend what we have," said Lisa Page, a governor's office spokeswoman. "The governor understands that these necessary budget reductions are difficult, which is why he is advocating for comprehensive health care reform and budget reform."

The lower Medi-Cal payments will be difficult for any hospital to absorb, said Denny Litos, chief executive of the 398-bed Doctors Medical Center of Modesto. The 9,700 Medi-Cal recipients treated at DMC last year accounted for 42 percent of the hospital's patients, according to state records.

The hospital will lose an estimated $1.9 million in Medi-Cal payments in the next year.

"Like any other hospital, we are constantly faced with increases in the costs of operation, whether it's for payroll or the cost of supplies, and we are also faced with having to reinvest in our facilities," Litos said. "For our hospital, if you take almost $2 million away, it is roughly 20 percent of our net income after taxes. It comes right off the bottom line."