California hospitals have notched a victory in a series of ongoing battles that providers are waging against reductions in Medicaid payments that state lawmakers initiated in the past few years to cope with their rolling fiscal crisis.
The California Legislature violated the federal Medicaid statute in 2004 when it adopted a freeze in payment rates for hospitals that dont contract with the Medi-Cal program as select providers, the states 3rd Appellate District ruled in a 44-page opinion issued Nov. 19. The federal law, the court ruled, requires that hospitals have an opportunity to review and comment on proposed rates. The freeze, signed by Gov. Arnold Schwarzenegger more than a month after the start of the fiscal year and effective retroactively, waived the usual administrative procedures. About 100 hospitals sued to overturn it.
It was not done in a lawful manner, and it will have to be undone, said Lois Richardson, vice president and general counsel for the California Hospital Association. Richardson also said she was optimistic that the result will help the states medical providers in their opposition to a 10% rate cut effective July 1, 2008, and further cuts set to take effect March 1, 2009. The cuts, she said, should be undermined by another federal provision that the opinion said restrains state legislatures: states must show that proposed rates are consistent with efficiency, economy and quality of care and sufficient to enroll enough providers to make services accessible.
A spokesman for the California Department of Health Care Services declined to comment because attorneys were still reviewing the opinion. -- by Gregg Blesch
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