In 2011, California lawmakers passed AB 97, which would cut Medi-Cal reimbursement rates by 10% beginning June 2011. The California Hospital Association (CHA) and other Medi-Cal providers sued, alleging that the cuts violated other state and federal laws relating to appropriations, healthcare, and agency procedure. Since that time, the CHA has been successfully keeping the cuts at bay through court-ordered injunctions. However, the CHA’s success has come to an end. The 9th Circuit Court of Appeals, where the case was last heard, has overturned itself and issued a superseding opinion that will allow the cuts to go through.
Medi-Cal reimbursements are how physicians, hospitals, pharmacies, medical transportation and home care providers are paid. With the cuts allowed to go into effect now, they will actually be imposed retroactively back to June 2011. As a result, care providers will have to take a 15% reimbursement rate cut for the next four years in order to repay the amounts that would have been due if the law had been allowed to go into effect when it was intended.
So far, CHA and the other plaintiffs have not indicated whether they will appeal to the U.S. Supreme Court. Several bills currently in the state legislature would repeal the cut for certain providers, including AB 900 which attempts to repeal the cut for skilled nursing, but would not be retroactive. For that reason, even if the repeals pass, Medi-Cal providers will be required to take a cut for the next four years in order to repay the last year’s cuts.
These cuts dovetail with California’s rollout of its new state-run health insurance exchange and Medi-Cal expansion as required under Obamacare. Providing care and health services within the Medi-Cal system is voluntary for providers. Unfortunately, health care advocates believe that there will be as much as a 25% reduction in care providers as a result of these cuts, which could make it more difficult to choose a physician or be seen in the future.
It remains to be seen what the real impact of these cuts will be. Keeping a close eye on the status of the medical industry and receiving appropriate advice is important if you plan on relying on Medi-Cal, particularly for long-term care. Many wartime veterans can qualify for VA Aid & Attendance Non Service Connected Disability benefits instead of Medi-Cal to help pay for long-term care needs. Depending on your income and assets, one program may be more suited to your needs when you have the option. Planning with a QMap or a QVap Trust can be accomplished to ensure eligibility even when dealing with common disqualifying events, such as a home sale.
Additionally, if Medi-Cal planning is not right for you, it is still important to get good advice about your future medical plan. Considering long-term care insurance, life insurance, or a reverse mortgage could all be reasonable solutions to your healthcare needs. Planning for your current health needs through your Advance Healthcare Directive and Financial Power of Attorney is also a vital part to your estate plan.
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