The California Department of Health Care Services has released its implementation plan for a 10 percent cut in provider reimbursements under the state's Medicaid program, Medi-Cal.
Medical transportation and dental care providers will feel the cuts first Sept. 5. Durable medical equipment providers will see the prospective payment reduction kick in starting Oct. 24. Physicians, clinics, pharmacies and distinct part nursing facilities will all experience the cuts beginning Jan. 9, 2014.
Although the cuts won't affect hospitals directly, the physician reimbursement reductions will hurt them indirectly as the medical foundations through which hospitals contract physicians will post deeper-than-normal losses, placing a heavier burden on hospitals' financial statements, according to Moody's Investors Service. Moody's has rated the reduction as a credit positive for the state but negative for its hospitals.
The state's release of the implementation plan follows a court battle and provider protests over the reimbursement reductions. In October 2011, HHS and CMS approved a state plan in which
However, U.S. District Court Judge Christina Snyder tentatively blocked the cuts in January 2012.
Since the reduction is effective for services provided on or after June 11, 2011, the Department of Health Care Services will retroactively recoup a percentage of provider payments. The recoveries won't occur until after the 10 percent reductions are in effect and providers will receive advanced notice 60 days beforehand.
Several of the state's largest healthcare providers and groups — Oakland, Calif.-based Kaiser Permanente, San Francisco-based Dignity Health, the California Medical Association and Anthem Blue Cross — rallied against the cuts earlier this year.
More Articles on Medi-Cal:
Circuit Court Strikes California's Medi-Cal Restrictions
Moody's: Medi-Cal Cuts Credit Negative for Hospitals
Kaiser, Dignity Health Plan Rally to Protest 10% Cut to Medi-Cal