Federal court upholds Calif. Medicaid reimbursement cuts

Looks like California will be moving ahead with its plans to reduce Medi-Cal reimbursement rates by 10%.

On May 24, the U.S. Ninth Circuit Court of Appeals denied a petition filed by the California Dental Association (CDA) and a coalition of healthcare organizations designed to stop the state from implementing the cuts, which were authorized by Assembly Bill 97, signed into law by Gov. Jerry Brown in June 2011.

In November 2011, the CDA, the California Medical Association, the California Pharmacists Association, and the National Association of Chain Drug Stores sued the California Department of Healthcare Services (DHCS) and the U.S. Department of Health and Human Services to stop the proposed cutbacks after the Centers for Medicare and Medicaid Services approved them.

In January 2012, a federal court issued a decision to block state officials from moving forward with the cuts. The state appealed that decision, and the case was heard last October by a three-judge panel of the Court of Appeals. In December, the panel overturned a district court decision to stop the retroactive cuts; in January of this year, the plaintiffs filed a request to have the appeal heard by a full panel. It was this request that was denied May 24.

The ruling essentially gives the state a green light to implement the 2011 law, which not only will affect Medi-Cal reimbursements to dentists, physicians, pharmacists, and other providers going forward but will also allow the state to recoup payments made since that law was blocked by the court injunctions, the CDA noted in a press release. The cuts could generate $50.1 million in general fund savings in the current fiscal year and $458.8 million in the coming year, according to state officials.

"This decision will be devastating to an already fragile safety net that is about to experience tremendous growth with an additional 1 million eligible children being added to the Medi-Cal program in California," said CDA President Lindsey Robinson, DDS. "The state's efforts to cut reimbursement rates will harm patients' oral health and their ability to access care at a time when California is trying to recruit more providers into the system."

Outside of a Supreme Court appeal, the federal judicial panel clearly stated it would not consider any further appeals, according to a report by California Healthline. However, two pieces of legislation already being considered -- SB 640 and AB 900 -- would reverse the 10% cuts.

The governor has said he would veto those bills, which have both been well-received by state lawmakers, according to Healthline.