Fight Over Medi-Cal Cuts Reaches the 9th Circuit

PASADENA, Calif. (CN) - Cutting California Medical Assistance Program reimbursement rates by 10 percent will hurt the poor, opponents told the 9th Circuit.

Off the back of a law approved by the California Legislature in spring 2011, Gov. Jerry Brown signed Assembly Bill 97 to help ease the state's massive debts by cutting rates for health care and Medi-Cal providers.

Late last year, a Medi-Cal beneficiary, five pharmacies, a pharmacy organization, an independent living center and a California association of independent living centers sued California and Secretary of the U.S. Department of Health and Human Services Kathleen Sebelius in the Central District of California to block the cuts under the Medicaid Act.

U.S. District Judge Christina Snyder quickly blocked enactment of the payment reductions for some Medi-Cal programs, leading the state and federal government to appeal.

Since the court also modified the injunction to exclude some services, the plaintiffs have cross-appealed that issue.

Judge Stephen Trott, sitting on a three-judge appellate panel, said he had seen an "avalanche" of information showing that the cuts would place California at the bottom of the pile for Medicaid reimbursement.

Justice Department attorney Lindsey Powell countered, however, that Sebelius had concluded that the rate cuts would not have a "deleterious effect."

California Deputy Attorney General Karin Schwartz noted that litigation against reimbursement rates was "grinding the state to a halt."

Judge Margaret McKeown snipped: "I don't think that's the reason the state's coming to a halt. At least that's what I've read in the newspaper."

Attorneys for Managed Pharmacy Care, the California Hospital Association and the California Medical Transportation Association argued that rate cuts would reduce the access to care upon which many patients depend.

But as the clock ran down, their scattered arguments seemed undermined by what McKeown called a "shotgun approach."

"You should never split your argument like this," McKeown said, barely masking her irritation. "It never works."

She also said that the state and federal governments should have consolidated their arguments for the purpose of the hearing.

Lynn Carmen of San Rafael, Calif., Lloyd Bookman and Craig Cannizzo with Hooper Lundy & Bookman, and Stanley L. Friedman of Los Angeles argued the case for the plaintiffs.

Judge Andrew Kleinfeld also sat on the panel with Trott and McKeown.

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