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Calif. Family Planning Clinics Grapple With Shrinking Reimbursements

January 7, 2014 — Funding changes and the expansion of Medicaid under the Affordable Care Act (PL 111-148) are compounding financial challenges for California's family planning clinics, the California Report reports (Dembosky, California Report, 1/3).

Under the ACA, states have the option to extend Medicaid eligibility to adults with incomes up to 138% of the federal poverty level, and about half of states have done so (Women's Health Policy Report, 12/19/13).

In California, the expansion means that many patients who received services through the state's Family Planning Access Care and Treatment Program are now eligible for Medi-Cal, the state's Medicaid program. However, Medi-Cal reimbursement rates are the third-lowest Medicaid payments in the country and are set to decline by another 10% next week, according to the California Report. As a result, clinics will receive lower reimbursements for those patients than when they were covered by Family PACT.

Planned Parenthood Affiliates of California President and CEO Kathy Kneer said, "Providers are looking at 2014 with a great deal of trepidation," adding, "[O]ur landlord's not going to take a rate cut, our utilities aren't going to take rate cuts, our staff are already undercompensated. It's very difficult." Kneer said that if clinics begin losing too much money, they will be forced to reduce the number of patients they see.

In addition, clinics might have to reduce the amount of time providers spend with individual patients. Kneer noted that although counseling time is critical to ensure patients understand the proper use of contraceptives, Medi-Cal does not pay for such sessions. Clinics also might face pressure to shorten visits to ensure patients do not face excessive wait times.

New Strategies

Clinics are developing various strategies to deal with the financial issues. For example, San Francisco's Women's Community Clinic plans to begin offering all types of primary care, instead of only reproductive health care. It also is considering applying to become a federally qualified health center, which would allow the clinic to use federal funds.

Meanwhile, some Planned Parenthood clinics are developing partnerships with other clinics and hospitals that allow for revenue sharing (California Report, 1/3).