CHA News Article

Court Rules Against Medi-Cal Rate Cuts

A three-judge panel of the U.S. Ninth Circuit Court of Appeals Monday released its decision that a 10 percent Medi-Cal outpatient fee-for-service rate cut, imposed by California from July 2008 through February 2009, was illegal because the state did not demonstrate that Medi-Cal patients’ access to services was equivalent to that of other patients. The 10 percent cut was replaced by a 1 percent cut in March 2009; in April of that year the Hospital Fee Program took effect, allowing hospitals to obtain reimbursement rates at or near the federal maximum.

CHA challenged the rate cut in 2008, and ultimately settled it as part of an overarching settlement involving other rate cases. However, a group of hospitals represented by a different law firm had separate litigation filed challenging the hospital outpatient rates, and continued with their case; these hospitals were deemed to have opted out of the CHA settlement. The case was sent back to the district court for further proceedings consistent with the Ninth Circuit’s opinion, which could range from issuing an order enjoining the state from implementing the rate cut to giving the government another opportunity to show that equal access existed. Regardless of the ultimate outcome, the decision is helpful to providers as it requires the state Medicaid agency to demonstrate equivalent access to care between Medi-Cal and other patients.