On Thursday, the 9th Circuit Court of Appeals ruled that California can reduce Medi-Cal payments for health care providers by 10%, overturning a lower court decision that blocked the cut, the Sacramento Bee's "Capitol Alert" reports.
Medi-Cal is California's Medicaid program (Yamamura, "Capitol Alert," Sacramento Bee, 12/13).
In October 2011, CMS approved the state's plan to reduce certain Medi-Cal payments by 10%. State officials have projected that the cuts will save $623 million.
According to the Department of Health Care Services, CMS allowed the state to make a 10% reimbursement cut to:
- A number of providers and outpatient services, including clinics, dentists, laboratories, optometrists and pharmacists; and
- Freestanding nursing and adult subacute care facilities, as well as other nursing facilities.
The cuts would be retroactive to June 1, 2011.
In January, U.S. District Court Judge Christina Snyder tentatively blocked the cut, saying it could cause irreparable harm to patients.
In her ruling, Snyder wrote that California's "fiscal crisis does not outweigh the serious irreparable injury plaintiffs would suffer absent the issuance of an injunction" (California Healthline, 1/31).
Details of New Ruling
A three-judge appeals court panel ruled that HHS Secretary Kathleen Sebelius has authority to decide whether California and other states can reduce Medicaid rates while still adhering to program regulations.
The judges wrote, "Congress explicitly granted the Secretary authority to determine whether a state's Medicaid plan complies with federal law" ("Capitol Alert," Sacramento Bee, 12/13).
Reaction to Ruling
Critics of the ruling say that California already provides one of the lowest Medicaid reimbursement rates in the U.S. They argue that the ruling could make it harder for patients to find physicians willing to accept Medi-Cal beneficiares after the program expands enrollment under the Affordable Care Act.
Lynn Carman -- an attorney for a group of pharmacies -- said, "If this decision stands, it will not only destroy the Medicaid program in California ... it will destroy the Obamacare program for millions of Americans who are now being shoved into the Medicaid program" under the ACA (Dolan/Megerian, Los Angeles Times, 12/13).
He added that patients "will not be able to obtain quality health care or access to services because providers cannot provide services at less than what it costs to furnish it" (Egelko, San Francisco Chronicle, 12/13).
Carman said the decision will be appealed (Dolan/Megerian, Los Angeles Times, 12/13).
In a release, the California Medical Association said that it hopes the state will decide against making the reimbursement cut. Molly Weedn -- CMA spokesperson -- said that when the cuts were approved in 2011, "things were much worse off" financially for the state (Dolan, "L.A. Now," Los Angeles Times, 12/13).
However, supporters say the 10% cut will make it easier to close the state's budget gap.
In a statement, a spokesperson for Gov. Jerry Brown (D) suggested that the governor would put budget priorities first and added that he was not likely to rescind the cuts.
The spokesperson said, "Today's decision allows California to continue providing quality care for people on Medi-Cal while saving the state millions of dollars in unnecessary costs" (Los Angeles Times, 12/13).