California Budget Includes Cap on DME — Again

SACRAMENTO, Calif. — On Monday, California Gov. Jerry
Brown released a state budget for fiscal 2011-12 proposing a
“painful” $1.7 billion in spending cuts for Medi-Cal, the state’s
Medicaid program, including a cap on DME benefits.

The cuts are part of Brown’s plan to eliminate California’s
burgeoning budget deficit, now estimated at $25.4 billion. With an
annual budget of $41.6 billion, Medi-Cal provides comprehensive
health care services to 19.7 percent of Californians, or 7.7
million beneficiaries.

“These cuts will be painful, requiring sacrifice from every
sector of the state,” Brown told reporters at a Jan. 10 press
conference, “but we have no choice.”

The budget plan includes 10 percent payment reductions to
physicians, pharmacies, clinics, medical transportation, home
health, adult day health care and some hospitals and nursing homes.
It also requires limits on service use for Medi-Cal
beneficiaries.

Specifically, the proposal sets a maximum annual benefit dollar
cap on DME ($1,604), incontinence supplies ($1,659), urological
supplies ($6,435) and wound care ($391). It also limits
prescriptions (except for life-saving drugs) to six per month, and
limits the number of doctor visits to 10 per year. The utilization
controls were set at a level that ensures 90 percent of
beneficiaries who utilize a particular service remain unaffected,
the proposal notes.

According to budget estimates, the limits on medical supplies
and equipment would save $9.8 million in 2011-12 and affect
approximately 20,000 beneficiaries. The proposed changes would take
effect no later than Oct. 1, and that means the California
Association of Medical Product Suppliers is readying for another
fight.

“Even if it were humane to say people have to share some of the
cost, it’s a sad commentary on where we are in our budget
priorities,” said Bob Achermann, executive director of CAMPS,
adding that the new budget “is an instant replay of what the
previous governor had proposed.”

In his 2010 budget, former Gov. Arnold Schwarzenegger had
originally proposed eliminating entirely some Medi-Cal benefits,
among them DME. When that didn’t fly, “they came up with a cap that
they said represents the 90th percentile of patient use so only 10
percent of beneficiaries would have any services denied,” Achermann
said.

“That’s certainly better than total elimination of DME,” he
said, pointing out that the caps weren’t applied to oxygen. “I
guess they didn’t think it was reasonable to say that you couldn’t
have oxygen in November and December.”

After months of wrangling last year, in the end the state
legislature rejected the caps. But
Brown’s new budget takes “the same illogical approach,” Achermann
said. “If a patient has usage that is higher than 90 percent, that
condition does not go away. Once they have reached that cap it
becomes an out-of-pocket expense, and chances are that many of
those patients have multiple needs and are managing multiple
conditions …

“The cuts don’t make any sense,” he continued. “They are just
going to lead to higher costs because the people you are cutting
are going to end up in the hospital. If you have diabetes and you
need to test but you can’t afford to buy the strips, you’re going
to end up in the ER.”

Achermann said “it’s tough to predict what politicians will do”
on the caps this time around, but California’s conundrum won’t go
away anytime soon. “When you look at correcting a $25 billion
problem, the only places you can really look are in Medi-Cal,
education and corrections — those are 90 percent of the state
budget.

“We’re in terrible shape here, and Medi-Cal is going to grow as
a result of health care reform,” Achermann said. “That tells you a
lot about the future for [providers] that survive.”

Take a look at the California governor’s proposed 2011-12 budget
at http://www.ebudget.ca.gov.

Last week, the Wall Street Journal reported that New
York Gov. Andrew Cuomo has proposed cutting that state’s Medicaid expenditures
by $2.1 billion. With the loss of federal matching funds, the
proposed cuts could top $4 billion. Details of those cuts are
expected next month.