Appeals Court Oks California Medi-Cal Cuts

California health officials got the green light to slash Medi-Cal reimbursement rates by 10 percent to providers of outpatient services, pharmacies, and nonacute services.  The 9th U.S. Circuit Court of Appeals dissolved four injunctions that had blocked rate cuts challenged by a coalition of medical groups, including pharmacies, dentists and the California Hospital Association.

The lawsuit was originally filed in November 2011 in Los Angeles after the state approved AB 97, which included a 10 percent reimbursement rate cut for doctors, dentists, pharmacists and other Medi-Cal providers.

U.S. District Judge Christina Snyder in Los Angeles ruled in January that the state’s financial crisis was not greater than the harm that might come to patients denied medical care.

A second lawsuit by the California Medical Association, representing 30,000 doctors, also sought to strike down the cuts.

The cuts were part of the state’s overall budget cutting to resolve its deficit woes.

The various lawsuits resulted in 11 separate appeals to the 9th Circuit.

The medical groups argued that the rate cuts failed follow required law to garner the required approval of the U.S. Secretary of Health.  The appeals court rejected the claim said the Secretary’s approval complied with administrative law.

The court also rejected the notion that Medicaid created some property rights on the part of the medical establishment and the cuts amounted to illegal “taking.”

The opinion was by Judge Stephen Trott and joined by Judges Andrew Kleinfeld and Margaret McKeown.

Case: Managed Pharmacy Care v. Sebelius, No. 12-55067






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