Media Statement

California Hospitals Remain Confident of Success In Medi-Cal Payment Lawsuit
Injunction Against Rate Cuts Remains in Effect Until Supreme Court Decision is Rendered

California hospitals remain confident that previous court rulings barring arbitrary cuts in Medi-Cal payments to hospitals, doctors and other providers in an effort to reduce the state’s budget deficit will ultimately be upheld, despite today’s announcement that the U.S. Supreme Court has agreed to hear an appeal filed by California state officials.

In 2008, CHA, along with a coalition of other health care stakeholders, joined in a lawsuit against the state of California to protect patients from the devastating impact of a 10 percent cut in Medi-Cal and Denti-Cal payments. Among other issues, the lawsuit contended that the cuts violated state and federal laws requiring the state to ensure payments to health care providers are sufficient to ensure access to health care services for Medi-Cal patients.

To date, the coalition of health care stakeholders has prevailed at every step of the legal process, up to and including the U.S. Court of Appeals for the Ninth Circuit. Today’s announcement that the U.S. Supreme Court has decided to hear the case is based on an appeal of the Ninth Circuit decision filed last year by state officials.

In addition to the court rulings, the 2008 rate cuts also have been rejected by the federal Centers for Medicare & Medicaid Services (CMS), which denied California’s proposed Medicaid State Plan Amendment in November 2010. Because Medicaid (Medi-Cal) is a joint state-federal program, CMS must approve any changes before they can be implemented. The single issue now pending before the U.S. Supreme Court deals with whether private individuals have the right to sue in federal court to enforce federal Medicaid law.

California’s Medi-Cal program has been chronically underfunded for more than two decades. Medi-Cal already ranks last in the nation in payments to doctors and hospitals that care for the state’s most vulnerable patients. Rates paid to doctors and hospitals in California are almost 25 percent less than the national average for Medicaid programs. In 2010, the Medi-Cal program underpaid California hospitals by more than $4.6 billion on the actual costs of delivering care.

Oral arguments in the case are expected to be heard by the Court next fall, with a decision in late 2011 or early 2012. In the meantime, a court injunction preventing the payment cuts from being implemented remains in effect.