Provider groups file lawsuit to battle Medi-Cal reimbursement rate cuts

SACRAMENTO, Calif. — The recent approval of a 10% reimbursement rate cut in California’s Medicaid program, known as Medi-Cal, by the Centers for Medicare and Medicaid Services has prompted provider groups to file a lawsuit against the California Department of Healthcare Services and the U.S. Department of Health and Human Services, alleging that the cuts did not follow proper legal channels.

The California Medical Association, California Dental Association, California Pharmacists Association and National Association of Chain Drug Stores joined together to file the lawsuit with the California Central Federal District Court. The California Hospital Association recently filed a suit on behalf of the Subacute Distinct Part Nursing Facilities that is set to be heard on Dec. 19.

“In late September, the Centers for Medicare and Medicaid Services asked DHCS for more information that would substantiate its state plan amendments for cuts in the Medi-Cal program. Without receiving that information, CMS went ahead and approved the cuts before them,” stated Francisco J. Silva, CMA general counsel and VP. “It is clear that CMS did not follow protocol and applied the wrong legal standard. The approval of the SPAs will have dramatic affects on access to health care for the poorest, most vulnerable Californians.”

The California legislature passed and Governor Jerry Brown signed AB 97, which included a 10% reimbursement rate cut for physicians, dentists and pharmacists. NACDS stated that federal approval was required before the state could implement its proposed cuts. By law, the state is required to submit underlying documents to CMS clearly documenting that access to care for Medi-Cal patients would not be impacted by the state plan amendments.

The California Dental Association believes the move will result in further hindrance of dentists’ ability to provide appropriate care. “The state’s elimination of adult dental services in 2009 was devastating to low-income Californians. More cuts to children’s services are unconscionable,” stated Dan Davidson, president of the California Dental Association. “California’s vulnerable children deserve better, and we must take a stand against the state’s willingness to obstruct their access to care.”

The information that CMS relied on to approve the state's cuts does not measure whether and how patients' access to care would be impacted or otherwise take into consideration, as required by law, the costs to provide the care. In fact, a recent poll and independent studies showed that access to care already is unequal, making the recent cuts illegal by federal standards, NACDS stated.

“Provider cuts may satisfy this year’s state budget but will ultimately result in greater long-term costs. This case isn't about pharmacist profits; it’s about pharmacists being reimbursed less than what they pay for the medication itself, not to mention any consideration for their professional services as a healthcare provider. Patients are the ones who are going to suffer,” added Jon R. Roth, CPhA CEO.

Because California Medi-Cal rates already are extremely low and many prescription medications are reimbursed at breakeven, many providers cannot afford to participate. Kaiser State Health Facts lists California as the lowest reimbursed state in the nation. The co-payments and arbitrary limits on services will create additional barriers for sick patients seeking care and ultimately, they likely will be forced to delay care or use emergency rooms for basic health services.

"As studies have shown repeatedly, jeopardizing patients’ access to community pharmacy services diminishes health and increases the reliance on costly forms of care. These drastic cuts are not in the best interest of patient care, nor are they in the best interest of the state’s finances," added NACDS president and CEO Steven Anderson.

"Community pharmacies help to reduce direct drug spending through strategies, including utilization of generic medications.  They also help to make health care more affordable through health-improving services, such as medication counseling, vaccinations, education and screenings," Anderson continued. "These cuts would turn the state’s back on innovative and affordable approaches to patient care, and turn the state’s back on patients themselves."

CMA, CPhA and CDA successfully sued in the past to enjoin prior Medi-Cal cuts, and the groups expect to once again demonstrate that federal law, which ensures that Medi-Cal patients have equal access to health care, was not followed.