California Healthline Daily Edition

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Judge Blocks Medi-Cal Reimbursement Cuts for Skilled Nursing Services

Last week, U.S. District Court Judge Christina Snyder ruled that California cannot cut Medi-Cal reimbursements given to hospitals for providing skilled nursing care, Bloomberg reports (Pettersson, Bloomberg, 12/29/11). Medi-Cal is California's Medicaid program.


In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10%. State officials projected that the cuts would reduce state spending by $623 million.

According to the state Department of Health Care Services, CMS allowed the state to make a 10% reimbursement cut to:

  • A number of providers and outpatient services, including clinics, dentists, laboratories, optometrists and pharmacists; and
  • Freestanding nursing and adult subacute care facilities, as well as other nursing facilities.

The cuts would be retroactive to June 1, 2011.

In November 2011, the California Hospital Association petitioned the federal district court in Los Angeles for a preliminary injunction to prevent DHCS from implementing Medi-Cal payment cuts for skilled nursing facilities in acute care hospitals (California Healthline, 11/23/11).

Details of the Ruling

Snyder issued a preliminary injunction to block the Medi-Cal payment cuts for hospital-based skilled nursing services (Carlson, Modern Healthcare, 12/29/11). Snyder said the hospitals demonstrated that irreparable harm would result if she did not temporarily block the cuts.

She said, "The state's fiscal crisis does not outweigh the serious irreparable injury the plaintiffs would suffer absent the issuance of an injunction."

State Response

Norman Williams -- a spokesperson for DHCS -- said that the state "strongly disagrees" with Snyder's ruling (Bloomberg, 12/29/11).

DHCS announced that it plans to appeal the preliminary injunction (Modern Healthcare, 12/29/11).

Judge Also Blocks Cuts to Medi-Cal Rates for Pharmacy, Managed Care Services

Also last week, Snyder issued a preliminary injunction to block 10% cuts in Medi-Cal payment rates for pharmacy and managed care services (Modern Healthcare, 12/29/11).

In October 2011, DHCS received federal approval to impose the cuts. The agency estimated that the cuts would reduce state spending by $152 million annually and reduce federal spending by $137 million annually. However, pharmacists argued that the cuts would hurt their profit margins and hinder access to care for Medi-Cal beneficiaries.

In her ruling, Snyder wrote, "as long as there is evidence showing that at least some Medi-Cal beneficiaries might lose services as a result of a rate reduction, irreparable harm is adequately demonstrated."

Williams said DHCS disagrees with the ruling and plans to appeal the decision (Pierceall, Riverside Press-Enterprise, 12/29/11).

For additional coverage of the rulings to block the Medi-Cal reimbursement cuts, see today's Capitol Desk post.

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