District Judge Rules Against Overturning Ban on Implementation of Medi-Cal Reimbursement Rate Reduction
U.S. District Court Judge David Levi this week ruled that the state "had not presented enough evidence to warrant reconsideration" of a previous ruling blocking the implementation of a 5% reduction in Medi-Cal reimbursement rates for some health care providers, the San Jose Mercury News reports (Lynch, San Jose Mercury News, 2/13). In November, the California Medical Association and 11 other plaintiffs representing Medi-Cal providers filed a lawsuit to halt implementation of the rate cut, which was approved by the Legislature as part of the fiscal year 2003-2004 budget to save the state $115 million and help eliminate a $38 billion budget deficit. The lawsuit claimed that the reduction violates the federal Social Security Act, which requires that Medicaid reimbursement rates attract enough doctors to serve the program's beneficiaries, and alleges that the state did not hold a properly noticed public hearing on the rate reductions. Levi in December ruled that the rate reductions, which were scheduled to take effect Jan. 1, would violate federal law because a previous ruling by the U.S. 9th Circuit Court of Appeals, which includes California, established that Medi-Cal beneficiaries are entitled to a rate-setting process that is not arbitrary and considers provider costs, quality of services and equal access to medical services. He issued a preliminary injunction that barred the rate cuts from taking effect for providers who serve traditional fee-for-service Medi-Cal beneficiaries -- who make up about half of the program's beneficiaries. The injunction does not apply to providers serving beneficiaries in private Medi-Cal plans because Levi ruled that health plans rather than health providers are responsible for challenging reimbursement rate reductions (California Healthline, 1/5). State finance and legal officials said that they would appeal Levi's decision to the 9th U.S. Circuit Court of Appeals in San Francisco (San Jose Mercury News, 2/13). Levi's ruling will "force the state to find" savings in other areas to balance the state budget, the Los Angeles Times reports (Los Angeles Times, 2/13). Gov. Arnold Schwarzenegger (R) has proposed an additional 10% reduction in Medi-Cal reimbursement rates, and he now must try to convince the Legislature to approve the proposed rate reduction "amid legal uncertainty," according to the Mercury News (San Jose Mercury News, 2/13).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.