Medi-Cal 10% Recoupment

The federal Centers for Medicare and Medicaid Services (CMS) recently approved the state of California’s request to cut Medi-Cal provider payments by 10%. This cut does not apply to physician or clinic services for children. Medi-Cal managed care plans have received a smaller cut — averaging 2.5% — and will have discretion in how that cut is implemented.

CMA is leading a coalition of entities that are suing both federal HHS and the state Department of Health Care Services (DHCS) to block what we view as illegal cuts. However, CMA must also help physicians to prepare for the possibility that the court will not block these cuts.

If the cuts are not blocked, they will be implemented retroactive to June 1, 2011. Therefore, after implementation DHCS will be recouping payments from providers back to that date.

CMA staff met with senior DHCS staff this morning to discuss how the recoupment process will work. DHCS is still working through many details, so we are sharing with you what we know and what is still being worked out. The information provided below should therefore be viewed as preliminary and subject to change. We have attempted to divide this into major issue areas to help you find the information you need.

Timeline

• DHCS is currently evaluating provider claims and payments to determine which providers must repay the state and by how much. DHCS intends to work with CMA and other associations to alert all impacted providers by January 2012.
• Although an exact timeline has not been set, the recoupments will happen over an extended period, likely more than a year.

Repayment Plans

• DHCS will employ their standard processes for a payment correction. For most physicians, this may mean that the recoupment could be done as a 5% additional reduction in future payments, on top of the 10% reduction, until the recoupment is complete.
• Physicians will have the ability to work out other repayment plans through the fiscal intermediary. For example, physicians can choose to repay their whole recoupment at once, or they can request a longer timeline.

Provider Notices

• Providers will be notified in writing of the amount that will be recouped from them.
• If physicians want to challenge the amount of the recoupment, they will work through the fiscal intermediary.
• CMA has asked that physicians receive detailed accounting of the recoupment (patient names, dates of service, etc.) so that physicians can reconcile their books. DHCS is currently looking into whether that is possible.
• CMA has further asked to see provider notices when they are sent. If that happens, we will share that with our leadership as soon as possible.

Managed Care

• Managed care plans received, on average, a 2.5% reduction to their capitation rates. The rate reduction to health plans is effective beginning July 1, 2011. However, plans will not experience a change to their rate cash flow until the middle of 2012.
• It will be left to the plans to decide if they want to pursue recoupment and, if they do, how they choose to implement it.

CMA will continue to work with the Department, and will make information available as soon as possible. In the meantime, please share this information with any physicians who take Medi-Cal patients, as they may need to begin setting aside money now to pay recoupment amounts next year.