Court Upholds Injunction Against Medi-Cal Reimbursement Cuts
On Thursday, the Ninth U.S. Circuit Court of Appeals unanimously ruled that California violated federal law last year by reducing Medi-Cal reimbursements by 10% for physicians, pharmacists and other health care providers, the San Francisco Chronicle reports.
Medi-Cal is California's Medicaid program (Egelko, San Francisco Chronicle, 7/10).
Last year, the Legislature approved a 10% Medi-Cal rate reduction in an effort to balance the state's budget (Williams, Los Angeles Times, 7/10).
State officials estimated that the move would lower state spending by $500 million (AP/Sacramento Bee, 7/9).
After the Medi-Cal cuts took effect on July 1, 2008, a group of health care providers sued the Department of Health Care Services, saying that lower reimbursement rates negatively affect beneficiaries' access to care (Los Angeles Times, 7/10).
On Aug. 18, 2008, U.S. District Judge Christina Snyder ordered an injunction halting the rate reductions. Snyder did not order the state to issue retroactive payments dating back to when the cuts took effect.
Details of Ruling
In Thursday's 3-0 decision, the court ruled that California violated a federal statute, which requires states that receive Medicaid funds to set reimbursement rates at levels that allow for equal access to health care.
The federal government funds 50% of the state's Medicaid program.
The court said the state implemented the cuts for financial reasons and did not sufficiently study how the 10% reductions would affect Medi-Cal beneficiaries' access to care.
The ruling also broadens Snyder's earlier injunction by requiring the state to retroactively reimburse physicians, pharmacists and other health providers by the amount cut from their fees on July 1, 2008 (San Francisco Chronicle, 7/10).
State Budget Implications
H.D. Palmer, deputy director of the Department of Finance, said California will have to pay $55.8 million to cover the withheld payments.
Palmer said that the ruling should not affect the state's $26.3 billion budget deficit because officials had not accounted for savings from the Medi-Cal cuts (Los Angeles Times, 7/10).
However, the ruling could hinder budget plans put forth by Gov. Arnold Schwarzenegger (R) and state legislators, who have proposed further Medi-Cal cuts for this fiscal year (San Francisco Chronicle, 7/10).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.