WEST Ap­peals court nixes Cal­i­for­nia’s Med­i­caid pay cuts to hos­pi­tals

Modern Healthcare - - REGIONAL NEWS - —Erica Te­ichert

HHS should not have ap­proved Cal­i­for­nia’s re­quest to re­duce hos­pi­tals’ Med­i­caid re­im­burse­ment rates for out­pa­tient ser­vices by 10% dur­ing the re­ces­sion, a fed­eral ap­peals court ruled last week.

The 9th U.S. Cir­cuit Court of Ap­peals de­ter­mined the de­part­ment didn’t con­sider whether the rate cuts would af­fect Medi-Cal ben­e­fi­cia­ries’ ac­cess to care in com­par­i­son with the gen­eral pub­lic’s ac­cess.

With­out that anal­y­sis, HHS can­not ap­prove a re­im­burse­ment rate re­duc­tion be­cause fed­eral law re­quires that Med­i­caid ben­e­fi­cia­ries re­ceive equal ac­cess to care, the three-judge panel said.

Cal­i­for­nia asked HHS in Septem­ber 2008 to ap­prove a 10% retroac­tive rate re­duc­tion for hospi­tal out­pa­tient ser­vices from July 2008 through Fe­bru­ary 2009. Although HHS ini­tially de­nied the state’s re­quest be­cause it didn’t in­clude in­for­ma­tion on whether the cuts would af­fect ac­cess to care, it ap­proved the plan in Septem­ber 2011 with ad­di­tional data show­ing that out­pa­tient-care de­mands and provider par­tic­i­pa­tion in Medi-Cal had re­mained sta­ble for three years. But 57 hos­pi­tals sued HHS in De­cem­ber 2011, al­leg­ing Cal­i­for­nia’s sub­mis­sion didn’t in­clude ev­i­dence com­par­ing ac­cess to cov­er­age for Medi-Cal’s 13 mil­lion ben­e­fi­cia­ries’ with the gen­eral pub­lic’s. Last week’s rul­ing over­turns a lower-court de­ci­sion in fa­vor of HHS. HHS de­clined to com­ment on the 9th Cir­cuit’s de­ci­sion.

Medi-Cal’s pay­ment rates are some of the low­est Med­i­caid rates in the coun­try, ac­cord­ing to Robert Leven­thal, an at­tor­ney at Fo­ley & Lard­ner who rep­re­sented the hos­pi­tals.

The ap­peals court re­manded the case to a lower court for fur­ther pro­ceed­ings. Cal­i­for­nia may have to re­pay the hos­pi­tals for the cuts.

HHS can ap­peal the de­ci­sion or ask the 9th Cir­cuit to re­con­sider the rul­ing.

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