California Hospitals Sue to Block Medicaid Payment Cuts
November 14, 2011
Claiming that reduced Medi-Cal provider payments will likely have “an unprecedented adverse impact on California hospitals and the Medi-Cal program as a whole,” the California Hospital Association (CHA) has filed a lawsuit seeking to halt the implementation of rate cuts approved by the federal Centers for Medicare and Medicaid Services (CMS).
The lawsuit, filed last week, claims that the rate reductions violate a section of federal law requiring that Medicaid payments be sufficient to enlist enough providers so that care to Medicaid enrollees is available to the same degree as the general public.
“The filing of this lawsuit is a regrettable, but necessary step to protect access to care for California’s most vulnerable patients,” said CHA President/CEO C. Duane Dauner.
“Federal officials were provided with compelling evidence demonstrating the negative impacts these cuts will have. Unfortunately, CMS turned a blind eye to these concerns and allowed state officials to move forward with these rate reductions, all in the name of addressing the state’s budget problems."
"California’s hospitals cannot stand by and allow these cuts to take effect,” Dauner added.
The hospitals are especially concerned about the rate cut to distinct-part skilled nursing facilities (DP/NF) within acute care hospitals. These units often care for patients with complex medical needs or those who require specialized services not available in freestanding nursing homes.
More than 10 percent of California’s skilled nursing beds are located within acute care hospitals.
While the cuts have been described as a 10 percent reduction, the actual reduction may be significantly higher because they are based on the payment rates in effect during FY 2008-2009.
Because they were based on older payment rates, the real effect of the reductions will be 20 percent or larger, according to the lawsuit.
In a recent survey of CHA member hospitals, 63 percent of those responding indicated that they will have to reduce beds or close their DP/NF units if the cuts take effect, while 45 percent said they would change their admission practices by limiting the types of patients or conditions for which they are able to provide care.
The CHA is asking for both a preliminary and permanent injunction to prevent the payment cuts from ever taking effect.