Judge Orders State To Suspend Planned Medi-Cal Rate Freeze

On Friday, U.S. District Judge Frank Damrell ordered the state to suspend its plans to freeze Medi-Cal reimbursement rates for inpatient care, the Sacramento Bee reports. Medi-Cal is California's Medicaid program.

Background

In October 2010, the state Legislature froze Medi-Cal reimbursement rates at the lesser of the rates paid on Jan. 1, 2010, or July 1, 2010. The rate freeze initially was scheduled to take effect on Feb. 1, but a temporary restraining order delayed its implementation (Walsh, Sacramento Bee, 3/5).

Hospitals and state officials agree the freeze would reduce hospitals' Medi-Cal reimbursements by about $169 million annually, compared with the level the rates would have risen to without the freeze.

In addition to cutting costs, state officials said the freeze would provide a fixed baseline for Medi-Cal reimbursements while the state develops and implements a new rate schedule (California Healthline, 2/28).

Ruling Details

In his ruling, Damrell issued a preliminary injunction preventing the state from enforcing the freeze until a lawsuit by the California Hospital Association is decided on its merits or the parties reach an agreement.

Damrell said the rate freeze would cause "irreparable harm" because the U.S. Constitution prohibits hospitals from suing the state to recover lost funds.

The judge also noted that California has not obtained federal approval to enact major changes to its Medicaid program (Sacramento Bee, 3/5).