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