Politics & Government

With Medi-Cal ranks swelling, health care industry funds campaign to raise rates

An image from video shows a "Medi-Cal is Me" ad campaign that seeks restoration of 10 percent cuts from previous years.
An image from video shows a "Medi-Cal is Me" ad campaign that seeks restoration of 10 percent cuts from previous years. www.medi-calmatters.org

In advertisements airing across the state, patients gaze plaintively at the camera and explain how California’s health care system is failing them.

“Medi-Cal is me,” they say, many of them children.

The spots are part of a $10 million salvo in a protracted dispute over how well the state reimburses doctors who see patients enrolled in Medi-Cal, the state’s insurance program for the poor. With ballooning Medi-Cal rolls providing an impetus and a stocked budget providing the means, an alliance between labor and the healthcare industry is pushing to reverse a rate cut imposed during the recession.

Year after year, medical interests have pushed California to rescind a 10 percent reimbursement cut authorized in 2011. Their arguments have failed to persuade Gov. Jerry Brown, who has again declined to include the restoration in his budget proposal. A pair of bills introduced this year to bump up rates either died or were amended to remove the rate increase.

Yet advocates still believe they have a chance to secure the change through the budget, and they are planning a sustained effort even if they cannot succeed this year. Fortifying the push is a statewide campaign funded by an unusual alliance between the California Hospital Association and the SEIU United Healthcare Workers West union.

After striking a labor agreement last year that led the union to drop a hospital pricing ballot initiative, the hospital association and SEIU-UHW agreed to fund a Medi-Cal rate campaign. The $10 million they have committed to spending leading into this year’s budget talks could be a just down payment.

“This is a multi-year effort,” said Dave Regan, president of SEIU-UHW, calling inadequate Medi-Cal funding “the single biggest fundamental strategic problem facing the future of the healthcare system in California.”

They have a wide range of healthcare industry allies. The California Medical Association, the California Primary Care Association and insurance companies have joined the “We Care for California” campaign. Lawmakers from both parties are pushing the rate increase, and the Assembly Budget Committee has recommended implementing the change over two years.

“We think we have a good shot of doing it this year because of the resources that have come in and because of the issues of health, the things we’re seeing in terms of services being lost,” said Assemblywoman Shirley Weber, D-San Diego, chair of the budget committee.

But the estimated cost of reinstating the higher reimbursement rate – a committee analysis pegged it at $269 million – threatens to crowd out other spending proposals lawmakers have brought to Brown. The Senate Budget Committee has recommended restoring Medi-Cal dental care and other benefits but held off on calling for the 10-percent restoration.

“It was certainly not for lack of interest in doing so – it’s the price tag that is daunting,” said Senate Budget Committee chair Mark Leno, D-San Francisco. “Depending upon how well our negotiations go with the governor, it could consume almost everything we may have in terms of discretionary spending.”

With the federal health care overhaul expanding the number of people eligible for subsidized health insurance, about a third of California’s population now receives Medi-Cal.

The state estimates that more than 12 million people are enrolled, about 5.2 million of them children. Since the federal law took effect in 2014 some 3.5 million additional low-income Californians have signed up.

If Medi-Cal is to be a pillar of healthcare supporting that many Californians, advocates say, it must be sturdy.

“I’m excited about where we’ve come in terms of coverage,” said Assemblyman Rob Bonta, D-Alameda, but “when they have (insurance), it’s got to mean something.”

Advocates for erasing the reimbursement rate cut argue that people on Medi-Cal are struggling to obtain care. They say specialists cannot afford to accept new Medi-Cal patients and offer anecdotal evidence that people are instead seeking care at hospitals.

“We’ve seen, across the state, fewer and fewer providers are opting to see Medi-Cal patients,” said California Primary Care Association spokesman Ben Avey.

The Brown administration has resisted the argument. Officials note that financially struggling providers can still petition the state to be reimbursed in full and that the proposed budget sets aside $151 million in part to handle those exceptions. They also question the notion that higher funding will necessarily translate into better care.

“If you’re going to have an increase in rates, then show us demonstrably how you’re going to increase levels of service or increase access,” said H.D. Palmer, a spokesman for the Department of Finance.

In the upcoming year, only one quarter of Medi-Cal patients are projected to use the fee-for-service model that is dependent on the disputed reimbursement rate.

Most will instead be covered by managed care plans that pay a fixed monthly rate negotiated between plans and providers. Brown’s budget would allocate an additional $125 million over the previous year to cover increased payments to Medi-Cal managed care plans that contract with the state.

Given the migration of Medi-Cal patients into managed care, some medical professionals call the focus on reimbursement rates misplaced.

“It’s ten percent of a tiny number,” said Dr. Gil Simon, owner of the seven-site Sacramento Family Medical Clinics.

Still, Simon acknowledged that for specialists who generally operate under a fee-for-service model the compensation for seeing Medi-Cal patients is “pitiful.”

“For specialists to see a Medi-Cal patient is a true act of charity,” Simon said. “We are sending (patients) to Oakland and to Lodi and to Stockton to find specialty care.”

It has been years since Dr. Ted Mazer, an ear, throat and nose doctor in San Diego, stopped accepting new fee-for-service Medi-Cal patients. Even before the ten percent cut leveled in 2011, Mazer said, reimbursement rates made it a nearly impossible proposition.

“If you’re a Medi-Cal fee-for-service patient, I would say good luck finding a specialist to see you,” Mazer said. “You will drive to see someone clear across county and have to wait.”

To Mazer and other medical professionals, California offers both a healthcare success story and a failure. The state was an early and enthusiastic adopter of the federal healthcare law, setting up an insurance exchange and welcoming millions into health insurance. But doctors say California has failed to follow through with better-funded services.

“What we’re talking about is a massive influx,” said WellSpace Health CEO Jonathan Porteus, citing 175,000 new Medi-Cal beneficiaries last year in Sacramento County. “Now what they have access to is ongoing primary care, but we need to build the capacity to provide that.”

Jeremy B. White: (916) 326-5543, @CapitolAlert