Lawsuit Seeks To Block Latest Round of Medi-Cal Payment Cuts

On Jan. 29, a group of hospitals, pharmacies, other care providers and Medi-Cal beneficiaries filed a lawsuit in U.S. District Court in Los Angeles seeking to stop Medi-Cal payment cuts from taking effect on March 1, Modern Healthcare reports.

Medi-Cal is California's Medicaid program (Carlson, Modern Healthcare, 2/3).

Cut Details

The rate cuts were enacted in September 2008 as part of the fiscal year 2008-2009 budget. Beginning on March 1, budget legislation directs the Department of Health Care Services to cut Medi-Cal reimbursement rates by 5% for:

• Pharmacies;
• Rural and skilled nursing facilities;
• Some hospitals; and
• Sub-acute care.

In addition, the legislation calls for a 1% reduction for all other Medi-Cal fee-for-service benefits (AHA News, 2/3).

Legal challenges derailed 10% cuts to Medi-Cal reimbursement rates that were set to take effect July 1, 2008.

Lawsuit Details

The suit contends 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 argues that the state did not get federal permission before adopting the changes.

The suit names DHCS Director David Maxwell-Jolly as a defendant in the suit.

In a statement, the department said, "While we cannot comment on the specific arguments in the suit, we believe that Medi-Cal reimbursements will continue to comply with all applicable state and federal laws" (Modern Healthcare, 2/3).