One-Third of California Residents are at Risk of Poor Health Outcomes, Low Medi-Cal Base Rates Prevent Health Equity

by John Baackes, CEO, L.A. Care Health Plan

One-third of California residents, more than 13 million people, receive health coverage through Medi-Cal. It’s an essential program for low-income individuals and families, most of whom are people of color. However, Medi-Cal is severely underfunded, and its low base rates make it difficult to find providers willing to serve this population.

Sadly, California, the richest state in the nation, ranks near the bottom of all U.S. states in Medicaid reimbursement. Research shows our state’s low rates limit access to quality care and contribute to poor health outcomes for Medi-Cal beneficiaries.

How Low is Too Low?

To explain how low Medi-Cal rates are in comparison to other payers, Elaine Batchlor, MD, MPH, the CEO of MLK Community Healthcare penned a recent opinion article. Batchlor said MLK receives about $2,000 from commercial insurance for an emergency room visit. Medicare pays $650 for the same visit, and Medi-Cal only pays $150 for that same visit.

The COVID-19 pandemic illustrated the issue of poor access to care. The long-term inadequate investment in Medi-Cal was brought to light by the disproportionate impact the disease had on low-income people of color. They experienced more cases and more deaths. Underlying conditions and pre-existing co-morbidities played a role in the most severe COVID-19 cases, which further illuminates the failure of a system where low reimbursement results in fewer providers and delayed care.

What Can Be Done to Help?

The solution is to raise Medi-Cal base rates. Medi-Cal providers should be paid at least what Medicare providers receive. Increased Medi-Cal base rates would allow health plans to recruit more providers to work in the clinics and practices that serve Med-Cal beneficiaries. Equal reimbursement is an important step toward health equity.

Since Medi-Cal is funded by both federal and state dollars, there will have to be some government negotiation to determine the source of additional funding. This will obviously take time. But, as the CEO of the largest publicly operated plan in the country, serving more than 2.5 million Medi-Cal beneficiaries, I could not simply wait for the government to increase Medi-Cal base rates.

What L.A. Care Health Plan is Doing

The safety net in Los Angeles County are those clinics and practices that provide care, regardless of an individual’s ability to pay – the same providers who care for Medi-Cal beneficiaries. In 2018, L.A. Care launched Elevating the Safety Net, a $155 million initiative designed to recruit, train and retain highly-qualified primary care physicians for those practices and clinics.

The initiative offers grants to safety net clinics and practices to attract new physicians through salary subsidies, sign-on bonuses, or relocation costs. It also offers medical school loan repayments of up to $180,000 for new physicians who commit to working in the county safety net for three years. Since its launch, the initiative has resulted in 139 new physicians working in the L.A. County safety net, 144 new physicians have been approved for loan repayment grants, and 40 students have received full-ride medical school scholarships.

While, all of these actions will improve the safety net for Los Angeles County’s low-income communities, reimbursement equity remains the core solution to health equity. Low Medi-Cal base rates are forcing people go without care, an unthinkable option in the world’s wealthiest nation. Health equity is a laudable goal, but to achieve success, there must be greater investment in the Medi-Cal system.

California leads the nation in introducing new policies that expand access to Medi-Cal for tens of thousands of individuals previously excluded. It’s time to give the same consideration to the Medi-Cal system of care. Reimbursement equity is a first step in advancing health equity, which means that everyone has a fair and just opportunity to be as healthy as possible. A healthy population means a healthy and productive workforce serving our communities. In a recent analysis, 2.9 million California workers – almost one in six workers 19 to 64 – were enrolled in Medi-Cal. Until Medi-Cal providers are valued through equitable reimbursement, patients will continue to be challenged to find the care they need, when they need it.