Bills to Prohibit Retroactive Medi-Cal Rate Reduction Pass First Committee

The Legislature adopted a 10% Medi-Cal provider rate reduction that was to have taken effect on June 1, 2011 as part of the budget deal to close the then state budget deficit for 2011-12. Due to delays in CMS approval and a subsequent Federal  Court injunction that rate cut was never implemented for radiology services. Earlier this year a panel for the Ninth Circuit Court of Appeals reversed the ruling and DHCS has  indicated their intent to retroactively recoup that 10% cut back to June 1, 2011. They would do so by cutting current provider rates by 10% and then also taking an additional 5% of current payments each month until the individual provider payments have been recovered.

There is a pending request to have the entire Ninth Circuit Court of Appeals hear an appeal of the 3 judge ruling and pending a decision on whether to grant that hearing DHCS will not yet take any action.  A decision could come any day. In the meantime, a provider coalition is pushing two bills in the Legislature to block any retroactive “clawback” of the 10% both in fee for service payments or in reductions to Medi-Cal managed care plan capitation payments. SB 640 (Lara) passed the Senate Health Committee last Wednesday and AB 900 (Alejo) passed the Assembly Health Committee earlier this week. If passed these bills would need to be signed by the Governor or accomplished in the current budget process to become law. The Governor has been reluctant to undo any of the prior budget cuts that were used to balance the budget. His current budget proposal for 2013-14 still contains savings from the 10% cut. The CRS supports this effort and will keep you informed of developments.