Elsewhere: State can’t cut Medi-Cal payments to hospitals Chron

A federal appeals court in San Francisco today blocked nearly $200 million in proposed cuts in state Medi-Cal payments this year for health care services for low-income families and disabled people.

The 9th U.S. Circuit Court of Appeals said the state government violated federal law by failing to study whether the cuts would endanger the quality and availability of the health services.

A three-judge panel unanimously blocked a 5 percent cut in payments to pharmacists, adult day health care centers and certain hospitals and halted a $2 reduction in the hourly wages of home health care workers.

Most of the cuts, enacted by the Legislature in 2008 and 2009 in response to the state’s budget shortfalls, had already been stopped by federal trial judges in Oakland and Los Angeles.

The appeals panel issued four separate rulings in three lawsuits appealed from the lower courts.

Circuit Judge Milan Smith wrote, “We have repeatedly recognized that individuals’ interests in sufficient access to health care trump the state’s interest in balancing its budget.”

The court, quoting the U.S. Medicaid Act, said the law requires states to make sure payment rates are consistent with “quality of care” and “sufficient to enlist enough providers so that care and services are available under the plan.”

Medi-Cal is the California version of Medicaid, a joint federal/state program that pays for health services for uninsured low-income families and people with disabilities. It serves 7.1 million people in the state.

State governments set the payment rates for Medicaid health care providers. The U.S. government previously paid 50 percent of the costs but under the federal stimulus program is now paying 62 percent.

Rachel Arrezola, a spokeswoman for Gov. Arnold Schwarzenegger, said, “We strongly disagree with the court’s decisions, which interfere with the state’s ability to manage its finances and reduce its spending to match its revenue.”

Arrezola said, “We are confident that the U.S. Supreme Court will overrule the 9th Circuit’s rulings and reaffirm the state’s ability to make tough decisions to balance its budget.”

The state has already appealed to the high court in an earlier case in which a larger 10 percent cut in Medi-Cal payments in 2008 was blocked by a trial judge and the 9th Circuit for similar reasons.

Arrezola said the administration is reviewing today’s rulings to decide whether to appeal those as well.

Lloyd Bookman, a lawyer for the California Hospital Association and adult day care centers, said, “We’re happy the 9th Circuit is laying out as clearly as it can what rules the state has to follow to determine Medi-Cal rates. The rule should be crystal clear by now.”

Bookman said, “The problem is that the state has been making rate decisions as part of the budget process and not by considering the factors required in the law.”

Deb Roth, a representative of home care workers in the Service Employees International Union, said, “Today’s decision is a huge victory for frail people and people with disabilities who rely on home care so they can live at home instead of in more expensive nursing facilities.”

California Department of Finance spokesman H.D. Palmer said the blocked cuts would have saved the state $79 million in home health care worker payments, $53 million in pharmacy fees, $53 million in certain hospital costs, $7 million in adult day care center payments and $4 million in managed care costs in the 2009-10 fiscal year.

But Palmer said the $196 million in lost savings won’t add to the state’s current estimate of a $19.9 billion deficit in the next 18 months, because the estimate didn’t count on those potential savings.

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