On October 27, 2011, the federal Centers for Medicare & Medicaid Services (CMS) approved key elements of the state’s 2011-12 budget proposals to reduce Medi-Cal provider reimbursement rates, effective June 1, 2011. The Budget Act of 2011 assumes savings of $623 million General Fund from the reimbursement proposals.

Department of Health Care Services’ (DHCS) most recent amendments to its Medi-Cal program were approved only after CMS concluded that the proposals were fully supported by a thorough access analysis completed by DHCS and were accompanied by a unique monitoring plan that will collect data to ensure that access to care is not compromised as the reductions are implemented.

DHCS expects to initiate some of the provider reductions no later than December 31, 2011, while others will go into effect early next year.

As a result of CMS approving this policy change, DHCS intends to retroactively recoup any Medi-Cal reimbursements paid to providers since June 1, 2011. 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 provider associations to alert all providers impacted by January 2012. DHCS recognizes that this recoupment effort must occur over an extended period of time to ensure it does not negatively impact beneficiary access to care.