Federal Appeals Court Freezes Medi-Cal Pay Cut for Hospitals
On Monday, the Ninth U.S. Circuit Court of Appeals in San Francisco ordered a halt on California's 5% cut to Medi-Cal payments for hospitals, the San Francisco Chronicle reports. Medi-Cal is California's Medicaid program.
In July 2008, legislation took effect that reduced Medi-Cal reimbursements by 10%. Federal courts blocked the cut for physicians, dentists, pharmacies and other health care providers, but not for hospitals.
The law authorizing those cuts expired in February and was replaced by a 5% reduction, effective March 1, that aimed to save the state $80 million annually and had no expiration date.
Federal judges again blocked the rate cut for pharmacies, but said that hospital officials had not shown that the cuts would affect access to care for Medi-Cal beneficiaries.
According to Monday's ruling, legislators and state health officials lowered the payment rates for hospitals without considering the effects on quality of care, the economy or low-income residents' access to health services, a process that federal law requires.
The three-judge panel also said that hospitals were required to show only that the cuts would harm them financially and did not have to show that patients also would be harmed by the reductions.
The court rejected state officials' claim that blocking the rate cuts would negatively affect state residents by worsening the budget deficit, saying that the decision's effect on the deficit would be "minimal at most."
Lloyd Bookman, a lawyer for the California Hospital Association, said the ruling will benefit more than 300 public and private hospitals in the state, as well as 6.6 million state residents eligible for Medi-Cal and other patients at hospitals affected by budget cuts.
According to Bookman, the 5% reduction rate would have cost California hospitals about $80 million annually in state funds and $120 million in federal matching funds.
The state Department of Health Care Services, which administers Medi-Cal, said that it will carry out the ruling "as expeditiously as possible" but that it hopes the court ultimately will allow the rate reductions (Egelko, San Francisco Chronicle, 4/9).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.