9th U.S. Circuit Court Upholds State’s Plan To Cut Medi-Cal Rates
On Friday, the 9th U.S. Circuit Court of Appeals upheld a 10% cut to Medi-Cal reimbursement rates, the Sacramento Bee's "Capitol Alert" reports (Walters, "Capitol Alert," Sacramento Bee, 5/24).
Medi-Cal is California's Medicaid program.
Background on 10% Cut
In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10%. The state Department of Health Care Services has estimated that the cut -- which would be retroactive to June 1, 2011 -- will save the state $431 million.
According to DHCS, the cut would apply 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 (California Healthline, 4/11).
In December 2012, a three-judge panel of the 9th Circuit Court of Appeals overturned a district court ruling to stop the retroactive 10% cut (Robertson, Sacramento Business Journal, 5/24).
In January, health care providers asked the full 9th Circuit court to review the case (California Healthline, 1/29).
Health care advocates have said that the cuts -- which are based on funding levels from fiscal year 2008-2009 -- would result in a 25% reduction to Medi-Cal services (California Healthline, 4/11).
H.D. Palmer -- a spokesperson for the state Department of Finance -- said that Gov. Jerry Brown (D) included the payment reduction in his revised fiscal year 2013-2014 budget proposal earlier this month.
Implications of Ruling
Because of the ruling by the full 9th Circuit court, the cut now must be implemented unless plaintiffs appeal the case to the U.S. Supreme Court and the high court blocks the cut while the case is heard and decided.
State lawmakers also could block the cut by approving legislation that draws enough support to sustain a possible veto by Brown.
Palmer said that if the cut is implemented this fall as Brown intends, it could generate:
- $50.1 million in general fund savings in the current fiscal year; and
- $458.8 million in general fund savings in the next fiscal year.
Comments From Providers
In a statement, Paul Phinney -- president of the California Medical Association -- said, "The 10% cut to Medi-Cal will have devastating effects on California's poorest and most vulnerable patients" (Sacramento Business Journal, 5/24).
Phinney said the state needs to offer competitive reimbursements as it prepares to expand Medi-Cal under the Affordable Care Act.
Dauner said CHA is considering the next steps in the judicial process (Sacramento Business Journal, 5/24).
For more information on the ruling, check out today's "Capitol Desk."This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.