This notice is to provide information regarding pending changes to provider payments for Medi-Cal fee-for-service benefits and non Medi-Cal programs whose rates are identical to Medi-Cal rates. These reductions were adopted in ABX3 5 (Chapter 3, Statutes of 2008) Third Extraordinary Session and are necessary to address California’s significant structural budget deficit. Payments to these providers will be subject to a 10 percent payment reduction. Managed care plans will be reduced by the actuarial equivalent amount of the payment reduction. Each managed care plan will decide how to address this reduction and how it affects the providers under that plan. These payment reductions are mandated by Section 14105.19 of the Welfare and Institutions Code. Pursuant to state law, the payment reduction of 10 percent is effective for dates of service on or after July 1, 2008.

Payments will be reduced as described above, with the exception of the following services:

• Acute hospital inpatient services provided under contract with the Department of Health Care Services (DHCS).
• Federally Qualified Health Center services.
• Rural Health Clinic services.
• Skilled Nursing Facilities (SNF) as defined in subdivision (c) of Section 1250 of the Health and Safety Code, except a SNF that is a distinct part of a general acute care hospital.
• Intermediate Care Facilities for the Developmentally Disabled (ICF-DD) pursuant to subdivision (e), (g), or (h) of Section 1250 of the Health and Safety Code, or a facility providing continuous skilled nursing care to developmentally disabled individuals pursuant to the pilot project established by Section 14495.10 of the Welfare and Institutions Code.
• Subacute Care Units as defined in Section 51215.5 of Title 22 of the California Code of Regulations.
• Payments to facilities owned or operated by the Department of Mental Health or Department of Developmental Services.
• Hospice services.
• Contract services as designated by the director.
• Payments to providers to the extent that the payments are funded by means of a certified public expenditure or an intergovernmental transfer pursuant to Section 433.51 of Title 42 of the Code of Federal Regulations.
• Services pursuant to local assistance contracts and interagency agreements to the extent the funding is not included in the funds appropriated to the department in the annual Budget Act.
• Payments to Medi-Cal managed care plans for services to consumers transitioning from Agnews Developmental Center into Alameda, San Mateo, and Santa Clara counties pursuant to the Plan for the Closure of Agnews Developmental Center.
• Breast and cervical cancer treatment provided pursuant to Section 14007.71 of the Welfare and Institutions Code.
• Family Planning, Access, Care and Treatment (Family PACT) Waiver Program.

Additionally, the reductions described in this section will apply only to payments for services when the General Fund share of the payment is paid with funds directly appropriated to the department in the annual Budget Act and will not apply to payments for services paid with funds appropriated to other departments or agencies.