Medi-Cal providers bracing for pay cut

Doctors, hospitals, pharmacies get less in bid to shrink deficit

By KEN CARLSON
kcarlson@modbee.com

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The budget ax is going to fall Tuesday on health care providers who serve patients in the state's Medi-Cal program.

A lawsuit by health industry groups and lobbying efforts have done nothing to stop the 10 percent cuts in Medi-Cal reimbursements for physicians, hospitals and dentists. In addition, pharmacies will receive smaller payments for filling prescriptions for patients covered by Medi-Cal, the state's health program for the poor.

The Legislature approved the cuts in February, and Gov. Schwarzenegger signed them into law to take effect Tuesday, to address a state budget deficit estimated at $15.2 billion.

Hospitals in Stanislaus County are expected to lose at least $11 million in payments. Health advocates fear that more physicians will drop out of Medi-Cal and pharmacies will be faced with filling prescriptions at a loss or not serving those patients.

"We have all but camped out in (the governor's) bedroom to convince him to reverse these cuts, and nobody is doing anything to undo them," said Scott Seamons, regional vice president for the Hospital Council of Northern and Central California, an association representing hospitals in the region.

The California Hospital Association and California Medical Association were among the groups that filed suit to try to block the cuts. They are waiting for a court date in Los Angeles County Superior Court.

Along with the lower reimbursement rates, the state delayed for a month the Medi-Cal payments that were due to hospitals June 19. Another check- writing delay is set for August.

Hospitals with severe cash-flow problems have taken out low-interest loans to make their payrolls until the payments come in, Seamons said.

He said the cuts will be hard to bear for hospitals that rely on Medi-Cal payments for long-term care patients. Emanuel Medical Center in Turlock and Oak Valley Hospital in Oakdale operate long-term care facilities.

Emanuel, Oak Valley

Terry Gray, vice president of human resources for Emanuel, said Friday that the hospital stands to lose $2 million a year from the cuts. At present, the hospital doesn't plan to cut back on services at the 145-bed Brandel Manor skilled nursing facility.

"We will be continuing to provide the service to the community the best we can," Gray said.

Based on an updated analysis, the Oak Valley Hospital District expects to lose $2 million to the Medi-Cal cuts in the coming year, up from a previous estimate of $1.2 million. The cuts are mostly a hardship for its skilled nursing services and community health centers in Oakdale, Riverbank and Escalon.

No reduction in services or clinic hours is planned at this time, the district said. "We are going to monitor the situation on a daily basis," said Susan Mendieta, spokeswoman for the Oak Valley district.

Michael Polzin, a corporate spokesman for Walgreen Drug Stores, said the 10 percent reduction applies to the reimbursement to pharmacies for drugs and the fee for dispensing the drugs.

"It takes the reimbursement below cost," Polzin said. "We are going to see what kind of impact it has on our pharmacies, but it is not going to be a good situation."

Democrats in the state Assembly and Senate have proposed restoring some of the funding when the budget gains final approval this summer. At the same time, the governor's budget proposal contains more cost-saving measures in health care programs to lower the deficit.

Schwarzenegger has proposed tightening the eligibility for the Medi-Cal program, a move that has drawn fire from health advocacy groups in the state.