Physicians in California sue over new Medicaid pay cuts

CMS recently approved a 10% pay reduction the state passed for all health professionals.

By Alicia Gallegos — Posted Dec. 12, 2011

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The California Medical Assn. has sued the state Dept. of Health Care Services and the federal Dept. of Health and Human Services for cutting doctors' Medicaid rates by 10%. The pay cuts will harm patients already hit by a lack of available medical care, says the Nov. 21 suit, which was joined by the California Dental Assn. and other associations.

"The approved cuts are irresponsible and will only put the health of California's most vulnerable population further at risk," said CMA President James T. Hay, MD. "The federal government has made a terrible mistake in approving the cuts, especially in the face of health care reform. We simply cannot treat more patients with fewer resources."

The cut is the most recent conflict in a long-running battle between doctors and the state over pay under its Medicaid program, Medi-Cal. State lawmakers issued several rounds of cuts beginning in 2008, which health professionals sued several times to block. The U.S. Supreme Court is examining whether doctors have standing to sue over those cuts.

The latest cut comes from a budget plan approved this year by Gov. Jerry Brown. The decision to reduce payments for health professionals was not easy, but the cuts are needed to address the state's critical budget shortfall, said Norman Williams, a spokesman for the state Medicaid agency. The reductions were intended to cause the least impact to Medi-Cal recipients, he said in an email.

The Centers for Medicare & Medicaid Services OK'd the cuts and agreed with the state's conclusions, "based in large part on the access analyses. In addition, California created a unique monitoring system that will track beneficiary access to medical services as the rate reductions are implemented," he said. "Should this system show that access is unacceptably impacted by the reductions, the state will either reduce or eliminate the rate reductions immediately."

A CMS spokesman declined to comment on the CMA lawsuit.

CMA legal counsel and Vice President Francisco J. Silva said CMS asked the state Medicaid agency in September for more justification for the Medi-Cal reductions. But CMS approved the cuts without receiving that information, he said.

"It is clear that CMS did not follow protocol and applied the wrong legal standard. The approval will have dramatic effects on access to health care for the poorest, most vulnerable Californians," Silva said.

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Case at a glance

Should CMS have approved a 10% Medicaid pay cut for California health professionals?

The California Medical Assn. has filed a lawsuit with the Central California Federal District Court against the cuts, saying the reductions violate federal access-to-care laws. The California Hospital Assn. filed an earlier lawsuit against the cuts.

Impact: The CMA says the cuts mean that Medicaid patients will have less available medical care because more doctors will stop accepting these patients. The California Dept. of Health Care Services says the cuts are needed to offset a critical budget shortfall and will not affect access to care.

California Medical Assn., California Dental Assn., California Pharmacists Assn., National Assn. of Chain Drug Stores vs. Toby Douglas, director, California Dept. of Health Care Services, Kathleen Sebelius, secretary, United States Dept. of Health & Human Services, U.S. District Court, Central District of California, Western Division

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