California HME Updates

No State Budget: Medi-Cal Rate Reductions - Is there Movement?
(August 15, 2008)

The 10% Medi-Cal provider rate cut took effect on July 1st and there has been no success to date on injunctive relief to roll back the cut. An L.A Superior Court judge was supposed to issue a ruling last Friday but as of this writing there is no news. Any favorable decision may be appealed by the state and whenever effective likely would not be retroactive to July 1st.
 
The state budget is almost 49 days late with no vote yet taken on a budget. There were signs of a potential compromise between Senate leader Perata and the Governor on a sales tax increase and limit on spending growth. That seems to have a bit premature in terms of the details. Both Houses have scheduled floor session for this Sunday to possibly take up a budget. There need to be Republican votes in both Houses in order to get to a 2/3rds vote requirement in order to pass a budget. Most think that can happen in the Senate but is tougher in the Assembly without meaningful structural budget reform, i.e. a hard spending cap. The Legislature is set to adjourn at the end of August but that may not happen if no budget deal is struck.
 
The final budget deal may eliminate the 10% cut since that is what the Budget Conference Committee adopted but until the final package is voted on one can’t be sure. Medi-Cal payments without a budget are paid out of the health Care Deposit Fund which is funded through a loan. When that money is used up all payments to Medi-Cal providers will stop until a budget is adopted. It is unclear when that fund will be exhausted but August checkwrites are in jeopardy.
 
No payments are made in August to any “institutional provider” and are delayed until September. Institutional providers are defined as any entity licensed by DHS which would include dme and medical supply providers, but not anyone with a pharmacy provider number. That decision to have no checkwrites in August for institutional providers was part of the mid-year spending correction plan that was adopted in March to preserve cash flow.
 
We will keep you informed of any new developments.

 

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