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Governor Brown signs budget bills, including Medi-Cal and Healthy Families cuts Governor Jerry Brown signed budget bills on March 24 containing $14 billion in cuts, including reductions in Medi-Cal and Healthy Families programs, which the California Medical Association (CMA) strongly opposed. However, the budget bills prohibit the state from implementing the Medi-Cal cuts unless they are approved by the Centers for Medicare and Medicaid Services (CMS). CMA’s advocacy team will be doing everything possible to stop those cuts before they are implemented. CMS denied the 2008 Medi-Cal reductions, and although that issue is still under appeal, the state has not presented any new evidence that would cause CMS to change its opinion. The cuts in the bills the governor signed included: • A 10% reduction in Medi-Cal provider reimbursement rates. • Mandatory Medi-Cal co-payments for physician office visits ($5), non-emergency use of the emergency room ($50), and inpatient hospital stays ($100 per night up to a $200 maximum). The $5 Medi-Cal copayment, never before required in California, also applies to dental and pharmacy visits and Medi-Cal prescriptions. • A “soft cap” on physician office visits of seven per year. This is called a “soft cap” because physicians will be allowed to authorize more office visits if they feel they are medically necessary. • Increases in premiums and co-payments for children enrolled in Healthy Families.

• Elimination of vision services in Healthy Families. CMA succeeded last month in working with emergency physicians to remove from the budget a provision that would have taken $55 million from the Maddy Emergency Medical Services Fund, which reimburses emergency and on-call physicians and hospitals for treating the uninsured. CMA is continuing negotiations on a compromise proposal to allow the state to obtain a federal match for a portion of the Maddy Fund, which would permit the fund to retain its core purpose of caring for the uninsured. A loss of the entire Maddy Fund would threaten access to emergency care throughout California. All told, the Legislature has approved and the governor has signed budget cutbacks, closing roughly half of the state’s $26.6 billion deficit. Approximately $1.7 billion of the reductions were in the Medi-Cal program. Spending also was slashed for child care, universities and colleges, libraries, transportation, state parks, and prisons. Still unresolved are the governor’s proposal to eliminate more than 400 redevelopment agencies, and, the cornerstone of his budget, a measure that would ask voters to approve a five-year renewal of temporary vehicle, sales, and income taxes that are due to expire July 1, 2011. Brown is in continuing negotiations with lawmakers to resolve the remaining issues. (California Physician News, posted March 25, 2011)

Act now to avoid e-prescribing penalties in 2012 A change in Medicare law will penalize physicians beginning in 2012 if they don’t e-prescribe in the first six months of 2011. The new rules require physicians in individual practices to submit at least 10 Medicare Part B claims with the electronic measure code eRx G8443 and an eligible encounter code by June 30, 2011, or face a claims payment reduction of 1% in 2012. Physicians must also submit electronic prescriptions at least 25 times by the end of 2011 to avoid a penalty in 2013. A group practice participating in eRx GPRO I or GPRO II must also submit a minimum number electronically, but the number required will vary by the size of the group. Physicians can also avoid the reduction if they have fewer than 100 cases containing an encounter code in the measures denominator (outpatient E&M codes) for the period January 1 to June 30, 2011. Further exemptions are described by the Centers for Medicare & Medicaid Services (CMS) in the educational article “2011 Electronic Prescribing (eRx) 30 | THE BULLETIN | MARCH / APRIL 2011

Incentive Program Update—Future Payment Adjustments,” available at It should be noted, however, that a February 17 report by the Government Accountability Office criticized CMS for failing to coordinate the e-prescribing program with the federal electronic health record (EHR) incentive program, which provides financial incentives to physicians who demonstrate “meaningful use” of an EHR system. Each program requires different technology and each has different reporting criteria. The American Medical Association and other medical organizations wrote a letter to the U.S. Department of Health and Human Services in December 2010, urging changes in the e-prescribing program, but CMS has not yet responded. (CMA Alert, March 21, 2011 issue)

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