Court rules California Medi-Cal rates can be cut

December 17, 2012

The Ninth U.S. Circuit Court of Appeals has ruled that California has the right to cut reimbursement rates made to Medi-Cal providers-including pharmacies-by 10%, which overturns a lower-court ruling that blocked the rate cuts, according to a recentreport from the Associated Press.

 

The Ninth U.S. Circuit Court of Appeals has ruled that California has the right to cut reimbursement rates made to Medi-Cal providers-including pharmacies-by 10%, which overturns a lower-court ruling that blocked the rate cuts, according to a recentreport from the Associated Press.

Four groups of plaintiffs previously had filed suit against the Secretary of the Department of Health and Human Services and the director of the Department of Health Care Services of the state of California in the U.S. District Court for the Central District of California. The lower court had temporarily blocked the rate reductions to the state health program for the poor.

In this recent ruling, it stated that providers should not expect reimbursement rates to remain unchanged.

"The fact that States may submit SPAs and request approval for lower rates is enough to end the inquiry," according to the ruling. "Neither the State nor the federal government 'promised, explicitly or implicitly,' that provider reimbursement rates would never change," according to the ruling.

Governor Jerry Brown's administration expects the 10% reimbursement rate cut could save approximately $330 million annually, according to the Associated Press.

Gov. Brown's Budget Summary for 2012-2013 reported that there were approximately 7.7 million Medi-Cal beneficiaries in 2011-2012 and that number is expected to climb to 8.4 million in 2012-2013. Medi-Cal is expected to be 60% of the Health and Human Services Agency budget of $100.1 billion in 2012-2013, according to the budget summary.