Appeal Denied: Medi-Cal Rate Cuts Poised to Move Forward

By Judy Lin, Associated Press

A federal appeals court on Friday denied a second request by California doctors, pharmacists and hospitals seeking to undo the state's 10 percent provider rate cut for treating the poor.

The 9th U.S. Circuit Court of Appeals denied an appeal from medical providers to rehear their case, which allows Gov. Jerry Brown to begin implementing the cuts retroactively. A three-judge panel had ruled against them in December on the grounds that trial courts cannot block the state from making cuts that were approved by the U.S. Department of Health and Human Services.

Health providers vowed they will continue to press lawmakers to restore the 10 percent reimbursement rate cut to the state's Medicaid program, known as Medi-Cal.

"While we are not surprised by the 9th Circuit Court ruling, we are certainly disappointed, as the 10 percent cut to Medi-Cal will have devastating effects on California's poorest and most vulnerable patients," said Paul Phinney, president of the California Medical Association, in a statement.

Phinney said the state needs competitive Medi-Cal payments as the state prepares to get millions of Californians health coverage under the Affordable Care Act. The association, which represents 35,000 doctors, says ongoing cuts have left doctors with little option but to stop taking qualified patients because the reimbursements do not meet the cost of overhead and supplies to treat them.

"Reversal of these cuts is a California priority," said Duane Dauner, president of the California Hospital Association, in a statement.

Friday's decision cements a budget victory for Brown, who has vowed to hold the line on spending. The administration had estimated the two-year savings from the cut would be $508.9 million but will revise the figure because the state assumed the decision would not be made until August, said H.D. Palmer, the governor's finance spokesman.

At the time lawmakers passed the cut, the reduction was projected to save the state some $330 million a year.

It's unclear if health providers will find success in reversing the cut this legislative cycle. Doctors and hospitals sponsored SB640 by Sen. Ricardo Lara, D-Bell Gardens, a bill that would restore the 10 percent rate cut, but the bill stalled in committee Thursday as the deadline nears for passing bills out of their houses of origin.

Another bill, AB900, by Assemblyman Luis Alejo, D-Watsonville, advanced in the Assembly this week only after Medi-Cal restoration was limited to skilled nursing facilities.