Medicaid Provider Rate Cuts Approved

Governor Schwarzenneger has approved cuts to the tune of almost 2.2bn in state budget. The cuts are over a period of two years. They seek to address a state budget deficit of $14.5bn according to a report by the Sacramento Bee. Spending is to be reduced by about $1 bn this fiscal and $1.2 bn next year.

These bill will save $544 mn in Medi-cal spending in FY 2008. This will happen through a reduction in provider payment rates to the tune of 10%. California’s Medicaid program is called Medi-Cal. The majority of FY 2009 savings are also from provider payment cuts.

The cuts are to come into effect from July 1. This is one month after the proposed date. This is to give time to lawmakers to reinstate a higher Medi-Cal rate in next years budget. Democratic legislators are hoping for a repeal of the Medi-Cal cuts. This may be possible through a tax increase, state lottery lease or some other revenue sources.

According to the Los Angeles Times, lasting savings are not likely through the approved cuts. This is because there may just be a delay of payments until the next budget and nothing else. Meanwhile there are other proposals in the offing. these include an elimination of dental services, optical care, and other optional services for adult beneficiaries of Medi-Cal.