Complaint says Calif.’s low Medicaid rates keep Latinos from getting care

A complaint filed this week with the U.S. Department of Health and Human Services' Office of Civil Rights charges California with engaging in unlawful discrimination by paying some of the lowest reimbursement rates in the country through Medi-Cal, the state’s Medicaid program for low-income residents.

The complaint alleges that what the San Jose Mercury News calls California’s “infamously low rates” are specifically preventing doctors and hospitals from treating Latinos, who make up the majority of Medi-Cal enrollees.

“The impact of that is human suffering and shorter life expectancy,” said Bill Lann Lee, senior counsel with the Civil Rights Education and Enforcement Center (CREEC), which filed the complaint on behalf of three Latino Medi-Cal enrollees along with a coalition of Latino advocates and attorneys. He spoke at a news conference announcing the complaint this week.

The Mercury notes that this is “a new strategy” by civil rights groups to boost insurance payment rates for the state’s poorest residents. Doctors and hospitals have long complained about Medi-Cal’s low rates — the program pays only about half of Medicare’s rates.

Gov. Jerry Brown has acknowledged the need for higher rates, according to the Mercury, but does not believe the state’s general fund should be the source of the increase. Instead, Brown has been pushing for a revised tax on health plans. A $2 cigarette tax is also being considered by the legislature. But if neither passes, Medi-Cal’s rate problem could be exacerbated.

The civil rights coalition decided to file the complaint before the problem worsens in hopes that the threat of further lawsuits — plus billions in state budget surpluses predicted over the next few years — will pressure Brown and the legislature to find a way to raise the rates. 

CREEC’s Lee said low Medi-Cal rates constitute a “separate and unequal system of healthcare,” in violation of clauses in both the Civil Rights Act and the Affordable Care Act. Because Medi-Cal recipients cannot receive needed care, or must wait excessively long times for appointments, the low rates effectively separate Latinos from receiving equivalent care to other ethnic groups that hold private insurance, the organization says. Latinos are disproportionately impacted, since they make up 63 percent of all Medi-Cal enrollees, or more than 7 million beneficiaries.

In addition, the complaint points to a correlation between increased Latino enrollment and a simultaneous decrease in Medi-Cal rates. 

“In the past, when Medi-Cal was mostly white, you didn’t see this situation,” Lee said.

Lee and other groups filing the complaint noted that the low rates are not just impacting Latinos, but all recipients of Medi-Cal, which offers insurance to adults and families earning up to 250 percent of the federal poverty level, or $4,186 per month, for a family of three.

According to KQED News, state officials insist they are committed to serving California’s most vulnerable populations. KQED quoted Jennifer Kent, director of the California’s Department of Health Care Services as saying, “We work hard to serve all beneficiaries equally.”

The state also cited a January 2015 survey by the Blue Shield of California Foundation that showed 90 percent of consumers rated Medi-Cal as “good or very good,” and a substantial narrowing of a gap in satisfaction between whites and Latinos that was identified in 2011.

Since November 2013, the state has been aggressively enrolling new participants in Medi-Cal under expanded eligibility requirements that raised the income ceiling and offered coverage to single adults for the first time. Before Obamacare’s Medi-Cal’s expansion, which enrolled more than 4 million additional residents, California’s uninsured rate stood at 22 percent. It has since been cut in half.

While in theory more people now have access to care, the legal complaint pointed to examples of patients who could not receive the care they needed. It cited Medi-Cal fee-for-service rates as ranking 49th in the nation for primary care in 2014, and standing at only 42 percent of Medicare rates. Meanwhile, Medi-Cal managed care, which covers almost 80 percent of the Medi-Cal population, bases its rates on those offered by the fee-for-service plans.

The Mercury’s Tracy Seipel, a 2014 California Fellow, notes the allegations about low reimbursement rates limiting access to doctors is “not unfounded.” Seipel cites a June state review of Medi-Cal that confirmed not enough doctors have signed up to care for the program’s 12.6 million patients, or almost one-third of California’s residents. She also notes that a UC Davis study found that Medi-Cal patients have lower survival rates for cancer than people who hold other types of insurance.

The Office of Civil Rights (OCR) is expected to review the complaint within six months. If OCR agrees with its arguments, the California Department of Health Care Services will be tasked with working with the stakeholders to come up with a solution.

[Photo by Neon Tommy via Flickr.]