In accordance with Assembly Bill X3 5, the Department of Health Care Services (DHCS) implemented a 10 percent provider payment reduction for services provided under the Child Health and Disability Prevention (CHDP) program, Medi-Cal and other programs effective for dates of service on or after July 1, 2008. On August 18, 2008, the U.S. District Court issued a preliminary injunction with respect to the 10 percent payment reduction, restricting DHCS from reducing Medi-Cal payments made to physicians, dentists, adult day health care centers, optometrists, clinics and pharmacies.

The injunction would also apply to Medi-Cal payments made to physicians and clinics for services provided to Medi-Cal recipients under the CHDP program. However, the 10 percent reduction has continued on those payments because the necessary changes to the CHDP claims processing subsystem were not made. It would take approximately two months to make the necessary system changes to stop the 10 percent reduction on just Medi-Cal payments to physicians and clinics provided under the CHDP program and continue the reduction on payments for other CHDP program services. The only way to resolve this problem immediately is to stop the 10 percent reduction on payments for all services under the CHDP program.

Thus, Electronic Data Systems (EDS) installed revisions to the claims processing system on October 31, 2008, to stop the 10 percent reduction on all CHDP claims for dates of service on or after August 18, 2008. An Erroneous Payment Correction (EPC) will be initiated to restore any underpayments for services subject to the injunction for dates of service on or after August 18, 2008. Subsequent to this action, an additional programming change will be made to restore the 10 percent reduction on services not subject to the injunction, such as state-funded only CHDP claims and Medi-Cal payments for services not subject to the injunction. When this is completed, a second EPC will be initiated to reprocess previously adjudicated CHDP state-only claims and claims for other services not subject to the injunction to recoup any overpayments for dates of service on or after August 18, 2008.