Los Angeles, CA – On the first day of the State of California’s fiscal year without a budget, L.A. Care Health Plan’s Board of Governors has announced that the organization will continue to pay Medi-Cal providers out of its reserve funds during the impasse.
Over 730,000 Medi-Cal beneficiaries are L.A. Care members. L.A. Care’s provider network includes four other health plans – Anthem Blue Cross, Care 1st, Kaiser Permanente, and Community Health Plan (CHP) – as well as a directly-contracted provider network of over 10,000 doctors, specialists, hospitals, and pharmacies. L.A. Care is prepared to pay $55 million out of its own reserves after the state emergency reserve fund is depleted.
“Not having a state budget on time is certainly not new to our health plan partners and providers, but with the state’s Medi-Cal rate cuts and more potential budget cuts to come, we felt a “perfect storm” was developing that could lead to even more providers deciding to leave Medi-Cal,” said Howard A. Kahn, L.A. Care’s CEO. “We are very concerned about the impact on access to care for our members, and want to stabilize the network and hopefully help calm some fears that providers have.”
The lack of a state budget coupled with Medi-Cal rate cuts is a double whammy for providers to absorb. Starting today, the Medi-Cal fee-for-service program has been cut by 10%; L.A. Care’s Medi-Cal managed care rate has been cut 7.9%. In response, L.A. Care has developed a $20 million package of financial incentives, also financed from its reserves, for its health plan partners and directly-contracted network. This financial package is designed to mitigate as much as possible the rate cut while maintaining quality and access to care. In addition, L.A. Care has decided not to pass along the rate cut to its own directly-contracted physicians and hospitals at this time. (Please see separate FAQ for rate cut information, available on www.lacare.org.)
L.A. Care has approached its health plan partners to collaborate and develop strategies to keep money flowing to the provider network during the budget impasse. “I’m very pleased that our health plan partners have agreed that keeping providers paid during the state budget crisis is very important,” said Kahn. “Without their help, L.A. Care would run out of funds within six weeks. But with their help, we anticipate being able to continue payments up to September 30, 2008.”
The news that L.A. Care was planning to continue paying doctors was met with relief by many providers. “Many of us are committed to serving the underserved, so we always expect to be stretched financially,” said Hector Flores, MD of Family Care Specialists. “However, with this happening year after year, and now with Medi-Cal rate cuts on top of it, it makes it extremely difficult to stay in business. L.A. Care has always been a great friend to the provider community, but this action really proves that they are in the trenches with us and committed to avoid interruptions in the services needed by L.A. Care patients.”
L.A. Care leadership remains hopeful that the state budget impasse will be successfully resolved soon, and that the Medi-Cal program will not sustain any further budget cuts. “California voters have already stated in recent polls that they understand cutting health care for the poor will make the situation worse for all Californians,” said Kahn. “L.A. Care has not had a rate increase in over 5 years, and now there’s a rate decrease. We’re down to the bone, and I think the Governor, legislators, and the voters are realizing that.”
About L.A. Care Health Plan
L.A. Care Health Plan (Local Initiative Health Authority of Los Angeles County) is a public entity and community-accountable health plan serving residents of Los Angeles County through a variety of programs including L.A. Care Covered™, Medi-Cal, L.A. Care’s Healthy Kids, L.A. Care Health Plan Medicare Advantage HMO SNP, and PASC-SEIU Homecare Workers Health Care Plan. L.A. Care is a leader in developing new programs through innovative partnerships designed to provide health coverage to vulnerable populations and to support the safety net. With more than one million members, L.A. Care is the nation’s largest publicly operated health plan.