Federal Judge Issues Preliminary Injunction To Block Medi-Cal Reimbursement Rate Cuts
Chief U.S. District Judge David Levi on Dec. 23 issued a preliminary injunction that will prevent the implementation of 5% cuts to Medi-Cal reimbursement rates for providers who serve traditional fee-for-service beneficiaries, who make up about half of the program's beneficiaries, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 12/24/03). The California Medical Association and 11 other plaintiffs representing Medi-Cal providers in November filed the lawsuit to halt the 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 claims 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 (California Healthline, 12/17/03). Levi 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 (Rabin, Los Angeles Times, 12/24/03). The preliminary injunction does not apply to Medi-Cal's managed care plans, whose members account for 51.6% of the program's beneficiaries. Levi ruled that "it is the responsibility of the health plans, not the providers, to challenge the cuts affecting those patients," the Chronicle reports. Lynn Carman, an attorney for the independent pharmacists who were represented in the suit, said they are considering whether to file an appeal or a new lawsuit to halt reimbursement cuts for providers who serve managed care beneficiaries (San Francisco Chronicle, 12/24/03).
"As long as the state wishes to be a part of the Medicaid program, it must meet the requirements of the Medicaid Act," Levi wrote in a 42-page order. He wrote, "In this case, there is no record of considered decision-making," adding that there is no evidence that lawmakers sought a recommendation from the Department of Health Services "or that any responsible official in state government made a determination" of reimbursement rates that took into account the provisions of the Medicaid Act. Levi said he has seen evidence that there are "serious access problems even under the current rates" and that providers are likely to stop accepting new Medi-Cal beneficiaries or stop serving their existing patients if the rates are reduced. While attorneys for DHS Director Diana Bonta, the defendant in the lawsuit, argued that the state made the cuts because it was "faced with very difficult choices and made the best decision that it could," Levi said that budget constraints "are not alone a valid justification for rate setting." Levi said Bonta's attorneys could not demonstrate that the Legislature made the cuts based on data that showed the reductions "could be sustained by providers, in light of their costs, without a loss of quality or equal access for Medi-Cal recipients" (Walsh/Brown, Sacramento Bee, 12/24/03).
The decision is "a victory" for patient advocates and professional organizations representing physicians, dentists and pharmacists, the Times reports. Dr. Jack Lewin, chief executive of the California Medical Association, said the decision will "prevent further erosion of access to care for our most vulnerable patients" (Los Angeles Times, 12/24/03). Although the plaintiffs had sought an injunction that would prevent cuts for all Medi-Cal beneficiaries, Craig Cannizzo, an attorney for the physicians in the suit, said, "I view [the decision] as a complete victory because it's going to be a very serious obstacle to the administration's proposal to consider further rate reductions." Former Gov. Gray Davis (D) initiated the 5% reductions, but Gov. Arnold Schwarzenegger (R) has proposed an additional 10% reduction to Medi-Cal reimbursement rates. DHS spokesperson Robert Miller said it was "much too early to say" what the ruling's implications are and what actions the department can take in response (San Francisco Chronicle, 12/24/03).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.