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California Groups Fight Medicaid Cuts

LOS ANGELES (CN) - Dozens of hospitals and an association of home health service providers challenged Secretary of Health and Human Services Kathleen Sebelius' approval of California's "woefully inadequate" Medicaid reimbursement rates.

Fifty-seven hospitals filed one complaint; the California Association For Health Services At Home filed the other, both in Federal Court.

The Association claims that reducing rates will lead to a "massive reduction" in at-home services.

The hospitals say that the Department of Health and Human Services "has not increased the rates for hospital outpatient services since July 1, 2004. They claim "that the Department has never performed a responsible study of the costs that efficient economical hospitals incur in providing quality outpatient services and has never determined whether the rates that are currently in effect, or that were previously in effect, are reasonably related to the costs that efficient and economical hospitals incur in providing quality outpatient services."

Nor has the department ever performed "a responsible study analyzing whether Medi-Cal beneficiaries have the same access to hospital outpatient services as the general population in the geographic area."

Doctors, hospitals and Medicare providers all over the country have said that the planned cuts to Medicare rates would force them to stop accepting new Medicare patients.

the 57 California hospitals want the rate reductions for outpatient services enjoined.

In the other complaint, the California Association For Health Services At Home claims to represent more than 500 providers of health and support services. It claims Sebelius approved rate cuts despite "conclusive evidence of a massive access problem" under existing reimbursement rates.

"The providers and beneficiaries are directly and adversely affected by the failure of the California Department of Health Care Services, the state agency with responsibility for operating the Medi-Cal program (the 'Department'), to set Medi-Cal reimbursement rates that are sufficient to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to Medi-Cal beneficiaries at least to the extent that such care and services are available to the general public in the geographic area," the complaint states.

Medi-Cal, California's Medicaid Program, must comply with federal Medicaid law to receive matching federal funds, and home healthcare services are "expressly identified as medical assistance under the Medicaid program."

The association claims that at-home early periodic screening, diagnosis and treatment services and the Home and Community Based Services waiver program are both underfunded, even though they are more cost-effective than institutionalized care in nursing homes or hospitals.

"Faced with rising costs, but static reimbursement rates, many Home Health Providers have either gone out of business or stopped providing care to Medi-Cal beneficiaries," the complaint states. "As a result, Medi-Cal beneficiaries are losing access to care in their communities. And more Home Health Providers may withdraw from the Medi-Cal program or be forced out of business altogether by the mounting financial losses caused by inadequate reimbursement rates."

The association blames the Department of Health and Human Services for underfunding the programs and "fostering significant access problems for Medi-Cal beneficiaries."

"Medi-Cal beneficiaries are either not receiving enough care, or are forced to remain in institutional settings such as hospitals, which are both significantly more costly and less desirable to beneficiaries who would prefer treatment in the comfort of their own homes. In many instances, a home health visit costs the Medi-Cal program significantly less than treatment in a nursing home or a hospital. Thus, the Department's failure to raise rates discourages cost efficient home care in favor of costly institutional care, which is further taxing a Medi-Cal system already in crisis," accordingly the complaint.

The association says it previously fought a 10 percent cut to "already inadequate rates paid to home health providers," in litigation that's pending in Sacramento Superior Court.

The association claims the Centers for Medicare & Medicaid Services (CMS) rejected a 1 percent rate cut but then did an about turn, even helping correct typos on the defendant department's resubmission.

"Incredibly," the CMS approved the rate cut "ignoring the massive reduction in access that had occurred while the 10 percent rate cut and the 1 percent rate cut were in place," the association says.

"This approval of these rate cuts was arbitrary and capricious and contrary to law because the department's own access study (and the only evidence on which CMS relied) demonstrated that the rates for Home Health Services were inadequate and had led to a massive reduction in access to home health services and that a rate increase was necessary," the complaint states.

The association, a nonprofit based in Sacramento, is represented by Robert Leventhal with Foley & Lardner. It wants approval of the 10 percent and 1 percent rate cuts to California's state plan enjoined.

The hospitals are represented by the same attorneys.

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