Fee-For-Service Hospitals File Suit Contesting Medi-Cal Reimbursement Rate Freeze
As expected, 30 hospitals on Thursday filed a lawsuit in U.S. District Court in Sacramento against the Department of Health Services, alleging that the state illegally adjusted Medi-Cal reimbursement rates for some hospitals in the fiscal year 2004-2005 state budget, the San Francisco Chronicle reports. The budget provision would allow Medi-Cal to provide reimbursements at 2003 rates to hospitals that do not contract with Medi-Cal but provide services to beneficiaries on a fee-for-service basis.
In the suit, Hooper, Lundy and Bookman attorney Byron Gross alleges that federal law prohibits legislators from basing Medicaid rate reductions on budgetary constraints. According to Gross, the state also failed to account for the increased cost to hospitals for complying with state seismic retrofit requirements, adjusting workers' compensation rates and meeting nurse staffing ratios. Gross said that some hospitals could lose as much as $1 million as a result of the rate freeze (Colliver, San Francisco Chronicle, 3/4).
Plaintiffs are requesting that the court invalidate the rate freeze or rule that it cannot be instituted without federal approval (Wasserman, AP/Contra Costa Times , 3/4).
Plaintiff attorneys have said they might add about 40 additional hospitals to the suit in the next several weeks.
According to the Chronicle, hospitals named in the suit "tend to be concentrated in rural and suburban areas in Northern California" (San Francisco Chronicle, 3/4).
The hospitals include:
Santa Rosa Memorial Hospital;
San Antonio Community Hospital;
- Seven Catholic Healthcare West hospitals;
Regional Medical Center of San Jose;
- Nine Sutter Health hospitals; and
- St. Joseph Hospital (AP/Contra Costa Times, 3/4).
DHS spokesperson Norma Arceo declined to comment on the lawsuit because she said the department had not yet been served.
Jan Emerson -- spokesperson for the California Hospital Association, which is not involved in the lawsuit -- said the group supports the hospitals in the case (San Francisco Chronicle, 3/4).