Courts Appear Poised To Reject Cuts to Medi-Cal Reimbursement Rates

California might have to abandon efforts to cut Medi-Cal reimbursements rates as part of the state budget if judges rule against the state in lawsuits over two separate sets of Medi-Cal cuts, the Los Angeles Daily Journal reports.

Medi-Cal is California's Medicaid program.

The state Department of Health Care Services expected the cuts to save the state about $500 million. DHCS administers Medi-Cal.

Appeal on 10% Cuts

On Feb. 18, a panel of judges from the 9th U.S. Circuit Court of Appeals challenged state officials' arguments in the state's appeal of a ruling that overturned the state's plan to cut Medi-Cal payments to providers by 10% across the board.

A district court ruling invalidated the cuts in August 2008 (George, Los Angeles Daily Journal, 2/25).

Gov. Arnold Schwarzenegger (R) approved the cuts in February 2008 and they were aimed at saving the state about $544 million in Medi-Cal spending in FY 2008-2009 (California Healthline, 2/19/2008).

Judges indicated that under federal law, the state is required to consider how payment cuts would affect Medi-Cal beneficiaries' access to care before it reduces reimbursements.

Supervising Attorney General Jennifer Kim argued that state officials were not required to perform a study of the impact of health cuts within a specified time limit.

A ruling in the case could come within weeks, according to the Daily Journal.

Challenge to Smaller Pay Cuts

Similarly, on Monday, U.S. District Judge Christina Snyder said she likely would issue an injunction barring smaller Medi-Cal reimbursement cuts from taking effect (Los Angeles Daily Journal, 2/25).

The cuts were enacted in September 2008 as part of the fiscal year 2008-2009 budget. Beginning March 1, the legislation calls for 5% cuts for:

Pharmacies;
Rural and skilled nursing facilities;
Some hospitals; and
Sub-acute care.

The legislation calls for a 1% reduction for all other Medi-Cal fee-for-service benefits (California Healthline, 2/24).

The state has not indicated whether it would appeal a rejection of the cuts (Los Angeles Daily Journal, 2/25).

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