Appeals court blocks Medi-Cal rate reduction

March 4, 2010

UPDATED AT 9:06 AM ON MARCH 4

A federal appeals court has blocked the state's attempt to cut reimbursement rates for Medi-Cal to doctors and hospitals, including the UC Davis Medical Center, shown here.

A federal appeals court has once again blocked California from reducing payments to doctors and hospitals that care for the poor under the state’s Medi-Cal program, finding that the Legislature did not sufficiently study the impact of the cuts before enacting them. The Ninth Circuit Court of Appeals also rejected the state’s attempt to cut reimbursements for the wages of in-home care workers by nearly 20 percent.

The appeals court panel upheld lower court injunctions blocking the rate reductions until a full trial on the merits of the case could be held. The Medi-Cal case was brought by the California Pharmacists Association and a long list of other plaintiffs. The case challenging reductions in the wages of in-home care workers was brought by a woman who uses in-home care and the Service Employees International Union, which represents the workers.

The panel did not say that the state could never reduce reimbursement rates. But because the programs are partially funded by the federal government, the state must follow federal rules for managing the services. One of those rules states that Medi-Cal reimbursement rates must be high enough to ensure that care and services available under the plan are available to the same extent that such services are available to the general population. This is known as the “equal access to care” provision.

The state argued in its defense that some of the services at issue are not available at all to the general population because they are designed for the low-income people. But the court found that the state still had a responsibility to determine if the rate cuts would reduce access to care before implementing them.

Writing for a three-judge panel, Judge Milan D. Smith scolded the state for its repeated attempts to cut Medi-Cal rates without sufficient study.

“We have now handed down multiple decisions instructing the State on (its) procedural requirements,” Smith wrote. “We trust that the State now understands” that in order for it to comply with those requirements, it must rely on “responsible cost studies” that provide reliable data on which to base its reimbursement rates. The court in the past has also ordered the state to study the impact of the proposed rate changes before setting the rates. In this case, the court found, “the state did neither.”

California’s reimbursement rates for Medi-Cal are already below average among larger states and the state’s cost per person in the program is among the lowest in the nation.

Gov. Arnold Schwarzenegger’s office said the state will appeal the ruling.

More info:

See the court’s opinions and memoranda here.

Note: An earlier version of this item incompletely identified the plaintiffs in the case involving in-home care.

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One Response to Appeals court blocks Medi-Cal rate reduction

  1. familydocwonk

    March 8, 2010 at 3:21 pm

    With the faltering economy and more Californians becoming uninsured, adverse selection is almost certainly putting additional strain on the Medi-Cal system. Now is not the time to cut Medi-Cal rates. Many physicians, especially non-primary care specialists, have stopped seeing Medi-Cal patients altogether because of historically low reimbursement rates. Cutting rates further hurts patient access, especially those Californians who may have had stable insurance before losing their jobs. As a family physician who serves Medi-Cal patients, I witness daily the difficulties faced by my patients. For example, break a bone that requires surgery? Well, there are no orthopedists in my immediate area that accept straight Medi-Cal. On strictly microeconomic grounds, I do not blame my orthopedic colleagues. However, “somebody has to be a doctor” in these situations as an orthopedist on-call for the ER once told me after begrudgingly accepting a Medi-Cal patient with a surgical fracture. These barriers to care will not be ameliorated by additional cuts. In fact, Medi-Cal rates should be raised to incentivize more docs to do the right thing: be a good doctor and treat our community’s patients.

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