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Should The Feds Pay For Higher Medi-Cal Rates In The Valley? Two Congressmen Say 'Yes'

Jun 13, 2017

The expansion of Medi-Cal in the Central Valley under the Affordable Care Act has been key to slashing the area’s uninsured rate in half in recent years. Hundreds of thousands of people signed up, and in most valley counties, about half of the population is on Medi-Cal. But according to some, having more people on the program has compounded the problem of low reimbursement rates for physicians and the area’s long-running doctor shortage.

Now, two valley Republican congressmen think they might have a fix with new legislation. Representatives Jeff Denham and David Valadao have co-sponsored House Bill 2779 which would use federal money to pay doctors more for providing Medi-Cal services in some of the poorest areas of the state like the Central Valley.

"if we are one of the most expensive states in the country and you reimburse at the lowest levels than most likely you are not only going to have a doctor shortage but doctors are not going to see new patients" Jeff Denham

“In California, one of our biggest challenges is the governor reimburses at 48 out 50 [states] in the country. So while we are one of the most prosperous states, we reimburse at one of the lowest rates,” Denham says.

It is true that California cut what it pays doctors for treating Medi-Cal patients during the budget crisis following the Great Recession. Those are payments made to physicians for procedures they perform, a model known in the industry as “fee for service.”

Governor Jerry Brown has also resisted calls in recent years to increase provider payments. However, the apparent budget deal reached Monday between the governor and legislative leaders includes a 2 percent rate increase for Medi-Cal providers. When asked about the governor’s thoughts on the Denham/Valadao bill, the governor’s press office declined to comment.

The Denham/Valadao bill would create a pilot program with the goal of demonstrating that higher rates means more docs jump on board. Denham does not have a dollar figure for the cost of program but he says he believes it can work in high poverty areas like the Central Valley.

“But one thing that we can be pretty sure of right now, is that if we are one of the most expensive states in the country and you reimburse at the lowest levels than most likely you are not only going to have a doctor shortage but doctors are not going to see new patients,” Denham says.

"This is the equivalent of asking for more legroom on an airplane when they just voted to blow out the engine," Anthony Wright

A press release from the two congressmen even contains a quote from a powerful ally: House Majority Leader Kevin McCarthy of Bakersfield.

Chris Perrone with the California Health Care Foundation says there is no doubt access for people on Medi-Cal is a problem in the valley. What he is not so sure about is whether low reimbursement rates are really the problem.

“And the reason for that is we have a managed care program that now serves 90% of full scope Medi-Cal enrollees. So for those full scope Medi-Cal beneficiaries, almost all of them are in a managed care program. And those managed care programs then determine what they pay providers or what they pay provider groups,” Perrone says.

In other words, the state doesn’t actually control the payment rates for the vast majority of Medi-Cal enrollees, and has been moving away from the “fee for service” model. So raising those rates, according to Perrone, might not make much of a difference. Denham and Valadao’s bill does not address managed care.

A bigger concern for Perrone and other health care insiders is the vote by both Denham and Valadao for the Republican American Health Care Act.

According to an independent analysis of the bill, it would cut around $800 billion dollars from the program nationwide over the next decade, likely leading to thousands being kicked off all together. The AHCA could cost California an estimated $24 billion a year.

“This is the equivalent of asking for more legroom on an airplane when they just voted to blow out the engine,” says Anthony Wright with Health Access California.

Wright says it’s hard for him to take the new Denham/Valadao bill seriously considering their votes for the AHCA.

“There does need to be improvement in access in the Medi-Cal program. What is the height of hypocrisy is raising that while having voted to make the situation billions of dollars worse with their vote for the house health bill,” Wright says.

Their vote for the AHCA has caused some to wonder if it endangers their 2018 re-election chances. Both Denham and Valadao have already drawn Democratic challengers.

Fresno State Political Scientist Lisa Bryant says the new bill is savvy politics with basically no downside.

If the AHCA fails to become law, Denham and Valadao can say they are still working to fix health care in the valley.

If the AHCA passes, the new bill they are co-sponsoring could be used to mitigate some of the political fallout already taking place.

“There are ad campaigns running. There are billboards up. If you drive up and down the 99 you see them, saying how this is going to affect their districts. So I think they are trying to put something out there to say ‘hey look, we are trying to work for our constituents. We are trying to represent our districts well, to the extent that we can’,” Bryant says.

Bryant isn’t convinced that voting for the ACHA will cost either representative their seat. But challengers are heavily citing that vote. And announcing this new bill could be a sign that Denham and Valadao are at least aware that access to Medi-Cal remains a big issue for their districts.