California Hospital Association seeks court injunction to stop Medi-Cal cuts

The California Hospital Association last week petitioned a federal district court to grant a preliminary injunction against California's Medicaid program, called Medi-Cal, to prevent it from making 10 percent reimbursement cuts primarily affecting hospital-based skilled nursing facilities.

The cuts, proposed earlier this year by the California Department of Health Care Services (DHCS), were aimed at helping the state close broad budget deficits. In all, Medi-Cal cuts were projected to save California $623 million.

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According to CHA, the cuts, approved by the Centers for Medicare & Medicaid Services late last month,  would cause some hospital-based SNFs to close, which would create access problems for Medi-Cal members needing these services.

"During months of conversations with state and federal officials, hospitals across California provided compelling evidence about the impact these cuts will have on access to care for our most vulnerable patients," said C. Duane Dauner, president and CEO of CHA in a prepared statement. "We believe that the cuts are in violation of federal Medicaid law and without regard for the welfare of thousands of patients with complex medical needs."

According to DHCS, the specific cuts approved by CMS were:

• A 10 percent provider payment reduction on a number of outpatient services, including physicians, clinics, optometrists, therapists, laboratories, dental, durable medical equipment and pharmacy.
• A new 10 percent provider payment reduction for freestanding nursing and adult subacute facilities.
• A 10 percent provider payment reduction and rate freeze for distinct part/nursing facility-B services.

Further, in announcing the federal approval for the Medi-Cal cuts, DHCS noted CMS only agreed to the cuts after the state provided a supporting study indicating the cuts would not curtail access to care and that DHCS would also set up a data collection and monitoring plan "to ensure that access to care is not compromised as the reductions are implemented."

But CHA contended, in a September analysis of the cuts, that care quality and access to hospital-based skilled nursing care was already severely compromised even before the proposed cuts. Further, it pointed out that the reimbursement cuts are even deeper than the 10 percent cited by DHCS since the 10 percent figure is derived from reimbursement rates from the 2008-2009 fiscal year. By this measure, CHA says the actual reduction is close to 20 percent.

The petition for an injunction on the proposed cuts is a follow-on legal filing to its lawsuit filed earlier this month contending the cuts violate existing federal Medicaid laws, which require that payments "are sufficient to enlist enough providers so that care and services are available under the (state's Medicaid) plan at least to the extent that such care and services are available to the general public…"

The hearing for the injunction request by CHA is scheduled for December 19.