General Information

U.S. Supreme Court Denies Distinct-Part Rate Cut Petition

On Oct. 3, the U.S. Supreme Court denied the state’s request for appeal of a 2010 Court of Appeal decision invalidating the payment limitations used to determine Medi-Cal per-diem payment rates for distinct-part nursing facilities (DP/NFs). The earlier DP/NF case challenged two different limits the state used to determine the Medi-Cal per-diem payment rates for DP/NFs in 2000-06 Medi-Cal rate years. The first limitation, which was in effect for all the years at issue in the case, required the Department of Health Care Services to exclude the costs of DP/NFs that have less than 20 percent Medi-Cal utilization when calculating the DP/NF payment median per-diem payments. CHA challenged this “exclusion methodology” because it artificially drives down payment rates. The second limit that CHA challenged was a rate freeze for DP/NFs in effect for the 2004-05 rate year. In September 2010, CHA received a favorable decision from the California Court of Appeal, First District, which held that both of the DP/NF payment limitations are inconsistent with 42 U.S.C. Sec. 1396a(a)(30)(A) and unlawful. The Court of Appeal ordered remand to the trial court for further proceedings consistent with the opinion. The amended Court of Appeal opinion became final when the U.S. Supreme Court “denied cert” this week. Further proceedings are required to determine an appropriate rate methodology and retrospective relief for hospitals from the unlawful DP/NF payment limits.