California doctors sue over Medicaid payments

California physicians are taking to the courts to argue that inadequate Medicaid rates and impending cuts will further compromise access to primary and emergency care.

A coalition of patients and health care organizations, including the California Medical Assn., has once again sued the California Dept. of Health Care Services, this time to block a new round of Medicaid payment cuts slated to take effect March 1. The proposed reductions range from 1% for physicians to 5% for hospitals, pharmacists and other health care facilities. The state Legislature approved the decreases last September under the 2008-2009 budget in an attempt to plug what is projected to be a roughly $40 billion shortfall this year.

The lawsuit, filed Jan. 29 in U.S District Court for the Central District of California, alleges the planned rate decreases violate state and federal laws requiring that Medicaid payments be sufficient to enlist enough health care professionals to ensure the availability of basic services.

Physicians last year won an injunction in a similar case and succeeded in blocking a proposed 10% across-the-board reduction in Medicaid fees. An appeal by the state is pending before the 9th U.S. Circuit Court of Appeals. A hearing on that case was scheduled for Feb. 18.

"We keep costs low by steering patients into primary and preventive care instead of emergency rooms, and Medi-Cal is an important part of that safety net," California Medical Assn. spokeswoman Amber Pasricha Beck said. Physicians saw only one rate increase in the past 20 years, and low fees continue to force many doctors to close their doors to Medicaid patients, she said.

In a separate action, a coalition of emergency physicians say they provided more than $100 million in unpaid services to Medicaid patients in 2007 alone. Five independent medical groups filed a class-action lawsuit in January alleging state officials have underfunded Medi-Cal and forced the burden of care onto emergency departments.

In addition to the growing ranks of the uninsured, dozens of hospitals and emergency departments across the state have closed in the past decade, said Raymond P. Boucher, the emergency physicians' attorney. The California Chapter of the American College of Emergency Physicians contributed financially to the doctors' case. The CMA was not involved in the case but praised the effort.

"Emergency doctors have a legal and a moral obligation to treat patients in critical need of care, but they can't do it for free," Boucher said. "When the state makes a promise that [Medicaid] patients will receive adequate medical care and requires physicians to provide it, [the state] has an obligation to pay the reasonable cost of those services." Instead, the state reimbursed less than half the cost of care, while the average number of emergency visits jumped 28%, according to the complaint filed in Los Angeles Superior Court.

The state Dept. of Health Care Services declined to comment on the lawsuits. The agency said in a statement it supports comprehensive health system reform "that would benefit patients and those who are on the front lines in delivering health care."