SACRAMENTO, Calif., May 5 /PRNewswire-USNewswire/ -- In an effort to
ensure that all Californians have continued access to vital health care
services, a coalition of health care providers today filed a lawsuit
against the state of California to prevent a planned 10 percent cut in
Medi-Cal and Denti-Cal payments from taking effect on July 1.
In February, the Legislature approved and the Governor signed into law
a total of $1.3 billion in cuts to the Medi-Cal program in an effort to
stem the state's budget crisis. The cuts are scheduled to take effect July
1 unless the court intervenes. In addition, the June 19 and August Medi-Cal
payments to hospitals, pharmacists and adult day health care providers are
slated to be delayed. For some providers -- such as rural hospitals and
individual caregivers -- the delay in Medi-Cal payments may result in
employees not receiving their paychecks and food service, pharmaceutical
and other vendors not being paid.
The class action lawsuit seeks an immediate injunction to block the
reduction in Medi-Cal payments. The suit was filed jointly by the
California Medical Association (CMA); the California Hospital Association
(CHA); the California Dental Association (CDA); the California Association
for Adult Day Services (CAADS); the American College of Emergency
Physicians, State Chapter of California (Cal/ACEP); the California
Pharmacists Association (CPhA); and the California Association of Public
Hospitals and Health Systems (CAPH).
Cuts Will Reduce Access to Health Care Services
The lawsuit, filed in Los Angeles County Superior Court, contends that
the planned payment cuts violate state and federal laws that require that
Medicaid (Medi-Cal) payments "must be sufficient to enlist enough providers
so that services under the (state's Medicaid) plan are available to
recipients at least to the extent that those services are available to the
general public." 42 C.F.R. Section 447.204 "Medi-Cal already doesn't cover
the cost of providing care," said Richard Frankenstein, M.D., president of
the California Medical Association (CMA). "This chronic underfunding is
forcing many doctors to leave the Medi-Cal program, which in turn deprives
these vulnerable patients access to primary and preventative medical care.
If these cuts take effect, Medi-Cal patients will be forced to seek care in
already overcrowded hospital emergency rooms, which undermines access to
care for all Californians."
According to the complaint, the reimbursement cuts authorized in
February were implemented "solely due to state budgetary woes, without
regard to the impact on the availability of Medi-Cal services." Such cuts
are illegal, according to the complaint, and are "being imposed on a system
already in crisis, wherein inadequate payment levels have resulted in a
scarcity of willing providers, creating serious access hurdles for Medi-Cal
beneficiaries." If the cuts are allowed to take effect, the lawsuit
continues, additional health care providers will withdraw from the Medi-Cal
program, which in turn will lead "to additional crowding of hospital
"California's emergency rooms are overburdened and chronically
overcrowded," said Michael Salomon, M.D., president of the American College
of Emergency Physicians, State Chapter of California (Cal/ACEP). "Ambulance
diversions and patient wait times are on the rise -- with many patients
having to wait hours, or even days, for a hospital bed. Slashing Medi-Cal
payments will make things even worse."
California already ranks dead last in the nation when it comes to
funding health care for Medicaid patients. According to the Kaiser Family
Foundation, California spends $2,701 per Medicaid beneficiary -- the lowest
rate in the nation. The national average is $4,662 per Medicaid
Patients in rural areas of California may be particularly affected by
the planned Medi-Cal payment cuts, where there may be only one pharmacy and
the local hospital also serves as a skilled nursing facility.
"It is almost impossible to grasp the real impact of these cuts on
small rural health care providers," said Charles R. Guenther, CEO of
Eastern Plumas Health Care District, which operates two small hospitals in
Portola and Loyalton in Plumas County, located in northeastern California.
"Our organization has already been through bankruptcy once -- we can't go
through it again. We have no operating cash on hand and we owe $1.5 million
in accounts payable. We are the only health care provider for about 1,500
square miles. We are having great difficulty in getting essential supplies
and keeping qualified staff even at the current level of Medi-Cal
reimbursement. If the state pulls the rug out from us by implementing these
cuts, we will have no choice but to reduce services and close facilities."
Reductions Violate Medicaid Regulations
The lawsuit also contends that under federal Medicaid law, the
Secretary of the U.S. Department of Health and Human Services (HHS) must
approve the policies and methods used for setting payment rates and that
such changes may not be implemented by the state prior to HHS' approval.
According to the complaint, California has yet to submit what is known as a
State Plan Amendment (SPA) to the federal government, requesting approval
of the reduced Medi-Cal rates.
Additionally, federal regulations require the state to establish
Medicaid payment rates for hospitals and other institutional providers
through a public process that includes publishing the proposed rates and
the methodologies and justifications used to establish those rates. No such
process took place before the 10 percent rate reduction was approved,
according to the lawsuit. Rather, the rate reductions were based solely on
an across-the-board slashing of the state's budget.
When it comes to Medi-Cal payments to physicians and other individual
health care providers, the lawsuit charges that "state law requires that
Medi-Cal fee-for-service rates be adopted pursuant to the regulatory
process and requires the Department (Department of Health Care Services) to
annually review Medi-Cal rates for physician and dental services, taking
into account Consumer Price Index cost increases, reimbursement levels
under Medicare and other third-party payors, prevailing customary charges
and other factors." As with the cuts imposed upon hospitals, the lawsuit
points out that no such regulatory process occurred before the rate
reductions for physicians and other providers were approved.
The Providers intend to seek an injunction to stop the cuts from going
into affect before July 1. We anticipate a court hearing on the request for
an injunction within the next thirty to forty-five days.
California Medical Association
California Dental Association
American College of Emergency Physicians,
State Chapter of California
California Association of Public Hospitals and Health Systems
California Hospital Association
CA Assoc. for Adult Day Services
California Pharmacists Association
SOURCE California Hospital Association