Rural Clinics Hope DHCS Email Will Turn Tide in Medi-Cal Benefits Lawsuit

The Department of Health Care Services has been accused of withholding information in a court case — information that has the potential to change the reimbursement status of rural health centers and federally qualified health centers in California, according to court documents filed Monday in the U.S. Court of Appeals Ninth Circuit by the California Association of Rural Health Clinics.

Officials from DHCS could not comment on the lawsuit, according to Norman Williams, deputy director of public affairs for DHCS.

“As this matter is in active litigation, DHCS will provide its response to CARHC’s recent motion in an upcoming court filing,” Williams said.

DHCS has now turned over the emails. The motion filed Monday claims the information in the emails was pertinent to the original suit filed four years ago. According to plaintiffs, a judge decided there wasn’t enough clarity to say RHCs and FQHCs should get optional benefits.

Rural clinic officials hope the emails may supply that clarity.

The case, California Association of Rural Health Clinics and Avenal Community Health Center v. Toby Douglas and the California Department of Health Care Services, revolves around the state’s move four years ago to eliminate optional Medi-Cal benefits such as dentistry, podiatry and chiropractic care.

The elimination of optional Medi-Cal benefits eventually was approved by CMS, but the lawsuit posits that two types of facilities should be exempt from those eliminations — rural health clinics and federally qualified health centers.

“We think we’re subject to the Medicare definition of physician,” said Gail Nickerson, president of CARHC. “We were supposed to provide those services when we could.”

The Medicare definition of physician applies to providers in federal programs. Rural clinics are arguing that that description includes podiatrists, chiropractors, and other providers in rural and federally qualified clinics.

At one point, both DHCS and CMS officials agreed with that, according to Nickerson — but DHCS officials later took the opposite view in court. According to a motion filed Monday to augment the court record, DHCS refused to release email exchanges with CMS that clarified that initial support.

“It turns out that an email became apparent,” Nickerson said, “where they all agreed that RHCs and FQHCs should follow the Medicare definition [and keep providing Medi-Cal optional benefits]. And we still think it’s a legitimate question.”

A letter to the attorney general’s office by CARHC attorney Kathryn Doi spells out the complaint: The statements in the email exchange, she wrote, “directly contradict the legal position that DHCS and your office have taken in this litigation. … It is extremely troubling that DHCS refused to produce this email exchange in response to two requests made pursuant to the California Public Records Act until ordered by the California Superior Court and thereby succeeded in burying this email exchange until it was too late for Plaintiffs to introduce it into evidence in the trial court proceeding.”

Nickerson said details of the exclusion are less important than the possibility that rural health centers might qualify for a benefit that has been eliminated.

“They would reinstate services to our patients where we’ve had to dial back,” Nickerson said. “In rural, that’s a huge issue.”

As for the mechanics of the court fight over the recently released emails, Nickerson is less concerned.

“I can’t assume anyone was purposely trying to mess things up. It can appear that way, that it was suppressed in some way, but really, it was an agreement that just sort of disappeared,” Nickerson said.

Nickerson said she doesn’t know the timeline of what happens next, but she’s eager to have this case heard in court soon.

“We want to follow the right rules, and we think the Medicare definition of physician applied in our environment,” Nickerson said. “And prior to the whole thing, the state and the federal officials, they agreed we were subject to the Medicare definition. So we just think that’s right.”

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