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Thursday, July 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

Hospitals Sue California Over Budget Cuts

SAN FRANCISCO (CN) - Fifteen hospitals say California puts 6 million poor, elderly and disabled people at risk by setting Medi-Cal rates so low that hospitals may be unable to treat them. The hospitals say the state cheated them and violated federal law by twice slashing Medi-Cal payment rates this year to cope with the state's budget crisis.

(Cedars-Sinai Medical Center sued HHS Secretary Michael Leavitt in a similar claim in Los Angeles Federal Court.)

"In California, there are more than 6 million poor, elderly, and disable people who depend upon the Medicaid Program for necessary health care services," lead plaintiff Santa Rosa Memorial Hospital says in the federal complaint. "Unfortunately, rather than setting rates to ensure that hospitals can continue to treat these patients, California has illegally taken money away from the State's Medicaid Program ('Medi-Cal') for the sole purpose of reducing the California budget deficit. For many years, California's payments to hospitals have been among the lowest, if not the lowest, in the nation; yet in 2008 California twice slashed its inpatient payment fees.

"The reductions are also illegal because the State never went through the detailed fact-finding, analysis, and notice-and-comment processes required by federal law. Hence, the federal government never properly approved the reimbursement cuts, as it was required to do under both federal and state law. Furthermore, the reimbursement cuts are inherently unfair, are based on inaccurate data, and are being implemented using misleading interpretations of the enabling statutes."

California is facing an anticipated $28 billion budget shortfall in the next 18 months.

The hospitals want the recent 10% Medi-Cal rate cut enjoined, and other relief. They are represented by Michael Sorgen.

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