From: Home Care Magazine

SACRAMENTO, Calif. — On Monday, California Gov. Jerry Brown released a state budget for fiscal 2011-12 proposing a “painful” $1.7 billion in spending cuts for Medi-Cal, the state’s Medicaid program, including a cap on DME benefits.

The cuts are part of Brown’s plan to eliminate California’s burgeoning budget deficit, now estimated at $25.4 billion. With an annual budget of $41.6 billion, Medi-Cal provides comprehensive health care services to 19.7 percent of Californians, or 7.7 million beneficiaries.

“These cuts will be painful, requiring sacrifice from every sector of the state,” Brown told reporters at a Jan. 10 press conference, “but we have no choice.”

The budget plan includes 10 percent payment reductions to physicians, pharmacies, clinics, medical transportation, home health, adult day health care and some hospitals and nursing homes. It also requires limits on service use for Medi-Cal beneficiaries.

Specifically, the proposal sets a maximum annual benefit dollar cap on DME ($1,604), incontinence supplies ($1,659), urological supplies ($6,435) and wound care ($391). It also limits prescriptions (except for life-saving drugs) to six per month, and limits the number of doctor visits to 10 per year. The utilization controls were set at a level that ensures 90 percent of beneficiaries who utilize a particular service remain unaffected, the proposal notes.

According to budget estimates, the limits on medical supplies and equipment would save $9.8 million in 2011-12 and affect approximately 20,000 beneficiaries. The proposed changes would take effect no later than Oct. 1, and that means the California Association of Medical Product Suppliers is readying for another fight.

“Even if it were humane to say people have to share some of the cost, it’s a sad commentary on where we are in our budget priorities,” said Bob Achermann, executive director of CAMPS, adding that the new budget “is an instant replay of what the previous governor had proposed.”

In his 2010 budget, former Gov. Arnold Schwarzenegger had originally proposed eliminating entirely some Medi-Cal benefits, among them DME. When that didn’t fly, “they came up with a cap that they said represents the 90th percentile of patient use so only 10 percent of beneficiaries would have any services denied,” Achermann said.

“That’s certainly better than total elimination of DME,” he said, pointing out that the caps weren’t applied to oxygen. “I guess they didn’t think it was reasonable to say that you couldn’t have oxygen in November and December.”

After months of wrangling last year, in the end the state legislature rejected the caps. But Brown’s new budget takes “the same illogical approach,” Achermann said. “If a patient has usage that is higher than 90 percent, that condition does not go away. Once they have reached that cap it becomes an out-of-pocket expense, and chances are that many of those patients have multiple needs and are managing multiple conditions …

“The cuts don’t make any sense,” he continued. “They are just going to lead to higher costs because the people you are cutting are going to end up in the hospital. If you have diabetes and you need to test but you can’t afford to buy the strips, you’re going to end up in the ER.”

Achermann said “it’s tough to predict what politicians will do” on the caps this time around, but California’s conundrum won’t go away anytime soon. “When you look at correcting a $25 billion problem, the only places you can really look are in Medi-Cal, education and corrections — those are 90 percent of the state budget.

“We’re in terrible shape here, and Medi-Cal is going to grow as a result of health care reform,” Achermann said. “That tells you a lot about the future for [providers] that survive.”

Take a look at the California governor’s proposed 2011-12 budget at http://www.ebudget.ca.gov.

Last week, the Wall Street Journal reported that New York Gov. Andrew Cuomo has proposed cutting that state’s Medicaid expenditures by $2.1 billion. With the loss of federal matching funds, the proposed cuts could top $4 billion. Details of those cuts are expected next month.