Friday, July 10, 2009

9th Circuit Court of Appeal Blocks Medi-Cal Cuts

Medi-Cal providers won an important ruling on Thursday, July 8, 2009. A federal appeals court in San Francisco today upheld a lower court ruling blocking a 10 percent cut ordered by the state Legislature in 2008 in Medi-Cal payments to doctors, dentists, pharmacies and other providers. The decision is Independent Living Center of Southern California, Inc., et al. v. David Maxwell-Jolly, Director of the Department of Health Care Services, State of California (9th Cir. Case No 08-56422).

A copy of the decision can be found at:

The 9th U.S. Circuit Court of Appeals said the California Department of Health Services violated federal law by failing to consider the impact of the cut on quality and access to health care.
A three-judge panel upheld a preliminary injunction issued by U.S. District Judge Christina Snyder in Los Angeles last year. The reductions would have amounted to several hundred million dollars.

Medi-Cal is the California version of the federal Medicaid program, which is jointly funded by the state and federal governments and pays for health services for uninsured low-income parents, children and people with disabilities. The program currently serves 7.1 million Californians.

The appeals court said a state budget crisis could not be used as a justification for illegal cuts in the program. Ninth Circuit Judge Milan Smith wrote, "We do not doubt the severity of the fiscal challenges facing the state of California," but said, "A budget crisis does not excuse ongoing violations of federal law." Smith further wrote: "There is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as the most needy in the country."

The cuts were due to go into effect on July 1, 2008. Later last year, the Legislature replaced those cuts with a 5 percent reduction for pharmacies and hospitals effective in March 2009, but those cuts were also blocked by court orders. The state is challenging the orders halting the second round of planned cuts in a separate appeal.

The decision held that the injunction against the 10 percent cuts should apply retroactively for the period between July 1, 2008, when the reduction went into effect, and Aug. 18, 2008, when the injunction was issued.

Attorney Commentary: The budget crisis will continue to impact California and Medi-Cal providers to a significant degree. Whether in enrollment, audits or the elimination of ancillary services -- the budget will continue to drive the agency. Med-Cal providers need to realize that for the next few years the budget will impact their practice and their ability to be paid.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates, Attorneys at Law, Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers who are Medicare and Medi-Cal providers.


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