Media Statement

California Hospitals Disappointed by CMS Decision to Allow Medi-Cal Rate Cuts to Proceed

The California Hospital Association (CHA) is disappointed by today’s news that the federal Centers for Medicare and Medicaid Services (CMS) has approved the state of California’s request to reduce Medi-Cal provider payments, despite compelling evidence provided by CHA and other organizations demonstrating the negative impacts these cuts will have on access to care for patients.

California’s Medi-Cal program has been chronically underfunded for more than two decades.  Medi-Cal already ranks last in the nation in payments to doctors and hospitals who care for the state’s most vulnerable patients.  Rates paid to doctors and hospitals in California are almost 25 percent less than the national average for Medicaid programs. In 2010, the Medi-Cal program underpaid California hospitals by more than $4.6 billion on the actual costs of delivering care.

The cuts approved today will only serve to exacerbate this difficult situation. Of particular concern to California hospitals is the rate cut that will be imposed on distinct-part skilled nursing (DP/NF) units within acute care hospitals.  These units often care for patients with complex medical needs or those who require specialized services not available in freestanding nursing homes. More than 10 percent of California’s skilled nursing beds are located within acute care hospitals.

While the cuts have been portrayed as a 10 percent payment reduction, in fact the cuts may be significantly higher because they are based on the payment rates in effect two years ago.   Cuts of this magnitude will have a devastating effect on access to care.  In a recent survey of CHA member hospitals, 63 percent of responding facilities indicated they will reduce beds or close their DP/NF units if these cuts take effect, while 45 percent indicated they would change their admission practices by limiting the types of patients or conditions for which they are able to provide care. 

Today’s decision by CMS was short-sighted and fails to put the interests of patients first.