Consumer Federation of California

In a office decorated with Chinese art and diagrams of body parts, Dr. George Ma cares for more than 4,000 patients.

Nearly three-quarters are covered by Medi-Cal, the state’s public insurance program for low-income Californians, and Ma said he receives $10 a month to treat most of them.

This summer, when California makes a controversial 10% cut to Medi-Cal rates, he could get paid less. Ma said he didn’t go into safety net medicine for the money, but he worries that the reductions will make it even harder for his patients to get medication, medical equipment and appointments with specialists.

The reductions to providers like Ma will also create a massive glitch in the implementation of national healthcare reform ‘ the cuts to Medi-Cal rates are to occur just as more people prepare to join the program under the Affordable Care Act. Currently 8.3 million poor Californians are covered by Medi-Cal, and more than 1 million new enrollees are expected beginning next year.

State officials argue the 10% decrease is necessary to keep healthcare spending under control, but medical providers fear it will devastate an already shrinking workforce and jeopardize patient care.

The reductions target physicians, dentists, clinics, pharmacists and hospital-based nursing facilities. The cuts, which are retroactive to 2011, are necessary to bring the state’s books into balance, according to Gov. Jerry’s Brown’s administration. They are projected to save the state $459 million in the fiscal year that starts July 1.

"There were a lot of very difficult decisions that were made to restore the fiscal solvency of the state," said Diana Dooley, secretary of the state Health and Human Services Agency.

The governor proposed the reduced payments, and lawmakers approved them in 2011 as part of a larger effort to close a multibillion-dollar state deficit. But with the books now balanced and the state in better fiscal shape, many lawmakers want to restore that money for those who care for the poorest Californians.

A bill to do just that received unanimous support in a state Senate committee before being held back by leaders from reaching the full Senate. Another bill in the Assembly would exempt certain hospitals from the cuts. Assemblyman Adam Gray (D-Merced) recently circulated a letter signed by more than 40 lawmakers from both parties urging Brown to restore those payments.

"At a time when California is expanding Medi-Cal health services to low-income individuals," the letter stated, "it makes no sense to shrink the supply of health care providers who will treat these populations."

But an outline of the budget deal between legislative leaders and Brown voted on by a legislative committee on Monday did not include a restoration of the cuts.

Dooley said California cannot afford to reverse the billions in healthcare cuts made over the last two years. "We proposed our budget assuming that these reductions were permanent and that we couldn’t afford to go back and restore them," she said. Some primary care doctors will have a temporary cushion because the healthcare law increases their reimbursement to the Medicare rate for 2013 and 2014.

A coalition of medical groups sued to block the cuts but lost in the U.S. 9th Circuit Court of Appeals. Now, the coalition is planning an appeal to the U.S. Supreme Court and has asked the appellate court to stop the state until a ruling is made. Last week, thousands of doctors and healthcare workers also staged a rally in Sacramento to protest the cuts.

Proponents say the push is about more than just trying to get more money for doctors and hospitals. California has among the lowest Medicaid reimbursement rates in the nation, they say, and the reduction will lead to fewer doctors opting to see those patients. If that happens, California Medical Assn. President Paul Phinney said, many Medi-Cal recipients won’t be able to find anyone willing to treat them.

"It’s going to be devastation," he said. "People won’t get the care that they need."

Pamela Davis, director of the Northridge Family Practice Center, said the state’s timing is "schizophrenic." "How can we put in this 10% cut and discourage people from wanting to serve the needy?" she said.

Davis said 70% of her patients receive Medi-Cal, and she has already warned staff about a possible pay cut. The practice also may have to limit the number of Medi-Cal patients who receive treatment, she said. "We’re all here because we believe healthcare is a right, not a privilege," she said. "The thought that economics would cause us to decrease the number of Medi-Cal patients would make us very, very sad."

The state Department of Health Care Services plans to monitor whether the cuts indeed make it harder for Medi-Cal members to find doctors and will address any problems that arise. The state already exempted some providers after determining payment reductions could have hurt access.

Ma, past president of the Los Angeles County Medical Assn., said he wishes politics didn’t affect how he practices medicine. "We do the best we can," he said, "but it’s frustrating."

Each day, Ma works roughly 10 hours and sees as many as 30 patients in his Chinatown office, many with chronic diseases such as diabetes and high blood pressure. He constantly advises them to eat better, exercise and keep up with their medication because regardless of how many times a month a Medi-Cal patient comes to visit, Ma only gets $10.

Vivian Luu, whose 89-year-old mother goes to Ma, said she worries that the quality of service will be reduced because of the Medi-Cal cuts. "A good doctor is hard to find," she said. "The government should take care of doctors so they can take care of patients."

In addition to doctors, about 90 hospitals that provide skilled nursing care to hundreds of sick and vulnerable patients will be harmed by the cuts, according to the California Hospital Assn.

Coalinga Regional Medical Center will probably be forced to close, Chief Executive Sharon Spurgeon said. The 123-bed facility, which cares for patients with strokes and Alzheimer’s, has an annual budget of $27 million and could owe as much as $5 million in doctors’ fee refunds to the state. "It is such a deep reduction that we cannot continue to operate," she said.

If Medi-Cal patients cannot find doctors to treat them, said Jan Emerson-Shea, a vice president at the state hospital association, it will also hurt taxpayers. "If more doctors drop out of the Medicaid program, those patients are going to come to the ER," she said. For that extra cost, "the state is going to be on the hook."