Back in 2011, California’s budget included a 10% cut in reimbursements for all healthcare providers in the state’s Medi-Cal program. The reductions were approved by the Centers for Medicare and Medicaid Services (CMS) in late 2011. A coalition of providers and patient advocates sued to stop the cuts and a federal court ruled in early 2012 that the cuts did indeed violate federal law, citing that the state had to “provide such methods and procedures relating to the utilization of, and the payment… sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population…”. In late 2012, a three judge panel of the 9th Circuit Court of Appeals ruled in favor of the cuts, a ruling that will be appealed to the full 9th Circuit Court of Appeals. The cuts will cost Californians jobs and the impacts could cost some communities’ their only access to a local pharmacist.

Now let’s take a look at what’s happening today. As part of his proposed 2013 state budget, California’s Governor Jerry Brown factored the “savings” that the state would see from the 10% reductions in Medi-Cal provider reimbursements AND retroactive implementation of the cuts into his total, showing a nearly billion dollar surplus.

The sad fact of the matter is that the cuts, if implemented, will have the opposite effect as many pharmacies and doctors are not going to be able to continue serving Medicaid patients and therefore California would not be meeting the legal mandate to provide equal access. The state is not likely to see the savings the Governor is accounting for – failing the people of California on two fronts. Instead, these reimbursement cuts will help to increase the cost of California’s healthcare by driving more patients to the emergency room where costs are higher instead of being treated earlier by lower cost providers.