California Hospital Association Sues To Block 10% Medi-Cal Cut

The California Hospital Association has filed a lawsuit in federal district court in Los Angeles against the state and HHS in an effort to block a 10% cut in reimbursements for a number of Medi-Cal providers, Bloomberg Businessweek reports. Medi-Cal is California's Medicaid program (Pettersson, Bloomberg Businessweek, 11/2).

Background

Last week, CMS approved the cut, which state officials have projected will save $623 million.

According to the state Department of Health Care Services, CMS has 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 are retroactive to June 1.

Heath care providers and patient advocates have argued that the cuts would cause more health care providers to stop treating Medi-Cal beneficiaries.

They also have said that the Obama administration could be jeopardizing the federal health reform law because the Medi-Cal system will be ill prepared to handle the large number of low-income patients who will become newly eligible for coverage (California Healthline, 10/28).

Lawsuit Details

According to the lawsuit, the payment reductions will hurt the ability of many hospitals from operating skilled nursing facilities. In addition, the lawsuit argues that patients, many of whom live in rural and other medically underserved areas, will face delays or gaps in services because of the cuts (Helfand, "Money & Company," Los Angeles Times, 11/2). The lawsuit also states that the cuts violate federal Medicaid law that requires states to pay enough to ensure beneficiaries have adequate access to providers and services compared with the general public (Carlson, Modern Healthcare, 11/2).

Comments

CHA President C. Duane Dauner said, "The filing of this lawsuit is a regrettable but necessary step to protect access to care for California's most vulnerable patients," adding that state hospitals "cannot stand by and allow these cuts to take effect" ("Money & Company," Los Angeles Times, 11/2).

CMS officials said in a statement that they approved the reimbursement cuts after DHCS submitted "extensive" data demonstrating that the reduction would not harm access to care (Modern Healthcare, 11/2).

DHCS spokesperson Norman Williams said the cuts can be carried out "while still maintaining sufficient access for Medi-Cal beneficiaries" ("Money & Company," Los Angeles Times, 11/2).

For additional coverage of CHA's lawsuit challenging the Medi-Cal cuts, see today's Capitol Desk post.