California providers bracing for Medicaid cuts

Some rural hospitals in California have been spared double-digit cuts in funding from portions of the state Medicaid program, but many other providers will be hit hard,  the Los Angeles Times reported.

The cuts in the program, known as Medi-Cal, start going into effect next month. Some payments, such as to hospital-operated nursing homes,are being cut as much as 25 percent. And since the reductions were originally supposed to have been phased in two years ago but were held up by litigation in state and federal courts, many providers will have to return payments already made.

Along with the hospital-based nursing homes, dentists and medical transporters will feel the cuts beginning on Sept. 5, followed by medical equipment providers and suppliers in October. They total about $600 million a year.

However, the California Department of Health Care Services (DHCS), which oversees the Medi-Cal program, recently decided to spare hospital-operated nursing homes in the state's rural areas from taking such cuts.

According to the California Hospital Association, the decision to spare the rural providers affects about one-third of the state's hospitals. However, the DHCS will still collect two years of retroactive overpayments, according to KPBS.

The decision to spare the rural providers in California comes as the federal government is taking a harder look at so-called critical access hospitals. The U.S. Department of Health and Human Services' Office of the Inspector General recently recommended dramatic changes to a program that gives rural and isolated hospitals better payment rates than their urban counterparts.

To learn more:
- read the Los Angeles Times article
- here's the KPBS article
- check out the OIG report