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State Can’t Balance Budget on Backs of|Developmentally Disabled, Groups Say

LOS ANGELES (CN) - Medi-Cal providers filed two federal lawsuits challenging California's reduction or freeze of reimbursement rates for hundreds of facilities that care for the developmentally disabled. The California Association of Health Facilities claims the state violated the Supremacy Clause by reducing Medi-Cal rates, and the Developmental Services Network and the Los Angeles United Cerebral Palsy/Spastic Children's Foundation challenged the state's freeze of Medi-Cal reimbursements for facilities for the mentally retarded and developmentally disabled.

The freeze took affect on Aug. 1, 2009 as a reaction to the state's budget crisis.

Nearly 300 service providers say the state and its health care director David Maxwell-Jolly violated the Medicaid Act by not considering whether the frozen rates are reasonably related to provider costs, nor how the freeze will affect the quality of care and access to care,.

"The payment limitation is illegal because, as it has multiple times before, the California Legislature failed to fulfill its legal mandate to consider whether the resulting reimbursement rates are consistent with efficiency, economy and quality of care, reasonably related to provider costs and sufficient to enlist enough providers so that Medi-Cal beneficiaries have access to the impacted services," the complaint states.

Without the freeze, the providers say, Medi-Cal payments to facilities for the developmentally disabled would have increased by 1 percent to 8.8 percent this fiscal year.

The freeze already has affected the patients because of the high costs of caring for people with special needs, according to the complaints. And as prices continue to rise, the patients will suffer even more.

The Developmental Services Network represents about 250 small to medium-size facilities. The Los Angeles United Cerebral Palsy/Spastic Children's Foundation operates more than 40 programs in Southern California. Both are nonprofits.

The California Association of Health Facilities claims that since California began instituting "flat percentage reductions in the payment rates for various classes of services covered under Medi-Cal," in 2008, the 9th Circuit has issued three, published decision ordered the state to comply with federal law, or "the offending state statutes will be pre-empted." The CAHF claims the new rate reduction "may differ slightly" from those already enjoined, but they were instituted through a "virtually identical" process, and "continue to ignore federal law".

Plaintiffs in both cases seek injunctions.

The Association of Healthcare Facilities is represented by Jordan Keville.

The Children's Foundation and the Developmental Services Network are represented by Kathryn Doi with Murphy Austin Adams Schoenfeld of Sacramento.

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