California

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger in May issued a revised state budget for 2010-2011 that proposes capping spending for DME to about $1,800 per Medi-Cal recipient per year.

The governor also proposes capping spending for supplies like wound care (about $400 per recipient per year), and eliminating reimbursement for enteral nutrition (unless a recipient is tube fed).

"Part of it is, they haven't been successful in cutting reimbursement rates, so they're getting desperate," said Bob Achermann, executive director of the California Association of Medical Product Suppliers (CAMPS). "The other part of it is, the governor is telling the legislature, 'This is how bad it is; are you going to cut your way out of this? I don't think so.'"

Medi-Cal reimbursement was cut 10% from July 2008 to March 2009 and then 1% from March 2009 on, but a group of providers, including HME providers, has sued to be exempted from the cut, and it looks like the courts are on their side, Achermann said.

The caps for DME and supplies don't make sense financially, Achermann and others argue. The governor estimates they would save only $3 million.

"Not a lot would change budget-wise," he said. "We're still $20 billion in the hole going forward."

The caps don't make sense rationally, either, they argue. How can the state cap spending for patients with life-threatening conditions that require DME like oxygen concentrators and vents?

"What are you supposed to do with those folks, put them in acute care?" asked Mark Ehlers, owner of Ehlers Health Supply in Stockton, Calif. "That's not going to fly. They're just trying everything and anything."

Or how can the state cap spending for more costly DME like power wheelchairs?

"If a Medi-Cal recipient needs to replace a $5,000 wheelchair, they're not going to just pay for the rest out-of-pocket," he said. "Otherwise, they wouldn't be on Medi-Cal."

DME and supplies aren't the only products and services feeling the heat. Other proposals in the budget: Physicians will be limited to 10 visits per Medi-Cal patient per year.