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Round One Goes to Services for Developmental Disabilities

California facilities for residents with developmental disabilities have been squeezed by state budget cuts — including a Medi-Cal freeze on some reimbursement rates. But just because California is low on cash, that doesn’t give the state the right to freeze those rates, U.S. District Court judge Christina Snyder said. She issued a preliminary injunction on Friday that halted some budget-cutting measures that don’t follow the law.

“Judge Snyder’s ruling is that the rate freeze was applied unlawfully,” Mark Reagan, attorney for the California Association of Health Facilities, said.

“This is just one round,” Reagan said, adding, “There will certainly be more rounds to come. But at least this piece has been achieved.”

Back in 2008, the Department of Health Care Services froze certain Medi-Cal reimbursement rates. “So whatever your rate was in 2008, that was going to be your rate forever,” Reagan said. “One of the things that was pernicious about this freeze is, it’s forever,” he said. “The costs of health care keep rising, but the reimbursement doesn’t.”

That means many care providers were paying some costs out of pocket, Reagan said. “So this means that their rates now will be calculated under a methodology that accounts for the costs of care they provide.”

The providers of freestanding pediatric subacute facilities and intermediate care facilities are generally small in size (with a six-bed maximum), and their clients are almost completely dependent on Medi-Cal money. The freeze has been draining some of that money away.

A new challenge is looming — the state made another 10% cut in Medi-Cal reimbursement rates, independent of the rate freeze of 2008.

“We’ll have to see if that 10% cut goes through,” Reagan said. “That’ll be left to another day.”

Reagan pointed out that the new law — which was recently passed by the Legislature and signed by the governor — still needs to get approval from the federal CMS.

“It still must get federal approval to do these things,” Reagan said. “They’re going to have to demonstrate that their decision is not just budgetary, and they have to show they analyzed those cuts and what effect they would have.”

The state’s health care services department is expected to appeal Friday’s decision.

Lifting the freeze would apply only to current rate levels. To try to recapture money lost during the freeze, CAHF is filing suit in state court to recoup the difference in payments from the past two-plus years.

If the rate freeze decision is subsequently overturned, or if the current proposal for a 10% reduction in Medi-Cal rates is upheld at the federal level, it could spell the beginning of the end for providers for residents with developmental disabilities, Reagan said. Right now, he said, the margin of cost containment is razor thin.

“Think of it this way,” Reagan said. “All they can really do is work on their costs. And when so much of that is underlying labor cost, you’re looking at reducing caregiver pay, perhaps not having as many ancillary providers, controlling overtime costs. It builds up. Eventually, you’re being threatened with your very own viability.”

Related Topics

Capitol Desk Medi-Cal