SACRAMENTO. (AP) — Federal health officials on Monday said California cannot force Medi-Cal recipients to make a co-pay for doctor visits and prescription drugs, a decision that brings relief to low-income patients but complicates the state's effort to close a $9.2 billion budget deficit.
A letter from the Centers for Medicare & Medicaid Services said agency officials were "unable to identify the legal and policy support" for the state's request.
The decision is the latest in a string of legal and regulatory challenges that have made it difficult for the state to reduce spending and balance its budget. Gov. Jerry Brown and lawmakers were planning to save $511 million a year in the health insurance program by requiring low-income patients to pay a share of their medical costs.
Under the state budget passed last year, Medi-Cal would require recipients to pay $5 for doctor and dental visits, $3 for preferred prescription drugs, $50 for emergency room visits and a maximum of $200 for a hospital stay. The co-pays were to start Oct. 1.
State officials said they intend to appeal to U.S. Health and Human Services Secretary Kathleen Sebelius and others in President Barack Obama's administration.
"We will be seeking a reversal of the ruling," said Brown's finance spokesman, H.D. Palmer. "If this ruling were to stand, it's another instance where the state would be precluded from achieving savings the Legislature has approved."
Advocates for the poor called it the right decision, saying the co-pays would have deterred people from seeking preventive treatments.
"For a lot of folks, hearing $5 for a doctor visit or $3 for a prescription doesn't sound like a whole lot, but when you're talking about a person on Social Security who relies on five prescriptions and regular doctor visits or when you are talking about somebody living on $500 or $800 a month, that's a large percentage of their budget," said Vanessa Cajina, a legislative advocate for the Western Center on Law and Poverty.
She said no state has been allowed to impose across-the-board co-payments.
The decision made public Monday is the latest setback for California's budget.
The state has been prevented from reducing funding for its in-home supportive services program, which serves about 435,000 low-income seniors and disabled people. In that case, a federal judge expressed concern that a 20 percent across-the-board service reduction would put seniors at risk and violates the American With Disabilities Act.
The state had been counting on $100 million in the current fiscal year and $200 million in the fiscal year that begins July 1 from in-home service cuts.
Earlier this month, a federal judge blocked the state from reducing Medi-Cal provider reimbursements by 10 percent after the federal government had approved the reduction. The proposed cuts were projected to save the state's general fund $623 million for the year.
The lawsuit was brought by the California Medical Association, which represents 35,000 doctors, along with other providers. Many doctors have stopped accepting Medi-Cal patients because the reimbursements do not meet the cost of overhead and supplies to treat those patients.
At the same time, the Brown administration is urging the U.S. Supreme Court to let the state cut fees to Medi-Cal health care providers without being subject to lawsuits by doctors, hospitals or the 7.6 million Californians the program serves. If the court agrees to prohibit private lawsuits, the state just would need to get approval from the U.S. Department of Health and Human Services.
A decision is expected by the end of June.