Federal Judge Blocks 5% Cut to Medi-Cal Reimbursement Rates
On Friday, U.S. District Court Judge Christina Snyder blocked Medi-Cal payment cuts set to take effect on Sunday, the San Francisco Chronicle reports (Egelko, San Francisco Chronicle, 2/28).
Medi-Cal is California's Medicaid program.
The cuts were enacted in September 2008 as part of the fiscal year 2008-2009 budget. Beginning March 1, the legislation had called for 5% payment cuts for:
- Rural and skilled nursing facilities;
- Some hospitals; and
- Sub-acute care.
The legislation had also called for a 1% reduction to paymentsÂ for all other Medi-Cal fee-for-service benefits (California Healthline, 2/25).
On Jan. 29, a coalition of hospitals, pharmacies, other care providers and Medi-Cal beneficiaries filed a lawsuit to block the cuts.
The suit contended that lawmakers did not undertake a thorough analysis of how the latest round of reimbursement cuts would affect Medi-Cal beneficiaries' access to care.
The lawsuit also argued that the state did not get federal permission before adopting the changes (California Healthline, 2/24).
Details of Ruling
Snyder said, "It appears that the Legislature enacted the rate reduction for budgetary reasons."
However, she ruled that California health officials and lawmakers had not considered how reducing reimbursements would affect beneficiaries' access to quality care as required by federal law.
An accountant who testified for pharmacists said the cuts would have driven many pharmacies to reduce the types of drugs and services available to Medi-CalÂ beneficiaries and forced some pharmacies to reduce hours or shut down their businesses.
California's Department of Health Care Services challenged the accountant's argument, presenting its own study that found the reductions would not harm pharmacies or patients.
However, Snyder said the study had been prepared this month -- nearly five months after Gov. Arnold Schwarzenegger (R) approved the rate cuts. Federal law requires states to conduct such studies ahead of time so the findings can be used to determine the rates, Snyder said.
The 5% Medi-Cal payment cut to pharmacies would have saved the state about $20 million through the end of this fiscal year and $72 million next fiscal year, H.D. Palmer, a spokesperson for the state Department of Finance said.
However, Palmer said state officials did not count on that funding to help balance the budget (San Francisco Chronicle, 2/28).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.